Indian skincare startup Mamaearth eyes $3 bln valuation in 2023 IPO - sources
21/06/2022 10:26
* India skincare startup competes with Unilever, P&G
* Mamaearth last valued at $1.2 bln, targets IPO at $3 bln
valuation-sources
* Company in talks to appoint JP Morgan, Kotak as
bankers-sources
* IPO plans come during broader rout in capital market
By M. Sriram
MUMBAI, June 21 (Reuters) - Sequoia Capital-backed Indian
skincare startup Mamaearth is in talks to raise at least $300
million in a planned IPO next year and is seeking a valuation of
around $3 billion, three people with direct knowledge of the
company's plans told Reuters
Founded in 2016, Mamaearth has become popular in India with
its range of "toxin-free" products such as face washes, shampoos
and hair oils. It competes with Unilever's India unit, Hindustan
Unilever HLL.NS , and Procter & Gamble Co PG.N in the booming
personal care industry.
The company was last valued at $1.2 billion in January this
year when it raised fresh funds from investors including Sequoia
and Belgium's Sofina.
Mamaearth is targetting a valuation of around $3 billion -
10-12 times forward earnings based on sales growth and future
revenue potential, a person briefed on the discussions said. It
plans to file draft regulatory papers by the end of this year,
said sources, who declined to be named as the plan is private.
Two of those sources said Mamaearth is in early-stage
discussions to raise at least $300 million in its IPO, with a
third source pegging the number at $350 million.
A Mamaearth spokesperson declined to comment on its IPO
plans. The company's target valuation for the IPO, and the funds
it plans to raise, have not been previously reported.
The company is in talks with JP Morgan Chase, India's JM
Financial and Kotak Mahindra Capital to appoint them as
bookrunners to the deal, the sources added
JP Morgan Chase declined to comment. JM Financial and Kotak
did not immediately respond to requests for comment.
Mamaearth's IPO plans come during a broader rout in capital
markets and a slowdown in India's booming startup ecosystem that
recorded a steller $35 billion in record fundraising last year.
Now, some startups are cutting back on staff and finding it
difficult to raise funds, Reuters has reported. urn:newsml:reuters.com:*:nL3N2X81FP
Mamaearth was co-founded by Varun Alagh, a former Hindustan
Unilever executive, and his wife Ghazal. With the brand endorsed
by popular Bollywood celebrities, the duo has cashed in on
growing e-commerce adoption in India by offering its products on
platforms such as Amazon AMZN.O and Walmart's WMT.N
Flipkart.
India's beauty and personal care industry is expected to
grow to $27.5 billion by 2025, from $17.8 billion in 2020,
Indian financial services firm Avendus estimates. The number of
online shoppers for beauty products is also projected to rise to
135 million from 25 million during that period, it added.
One equity research analyst, however, said the success of
Mamaearth's IPO could hinge on how it plans to rapidly expand
into offline sales. Most Indians still go to retail outlets to
shop, with e-commerce accounting for just 5-6% of spending.
urn:newsml:reuters.com:*:nL4N2LG2CQ
CEO Alagh told the Business Standard newspaper in January
that 70% of Mamaearth's sales come from online platforms, but it
was targetting a bigger offline presence and aiming to reach
40,000 retail outlets in 100 cities this year.
For the fiscal year ended in March 2022, Mamaearth's parent,
Honasa Consumer Pvt Ltd, registered a revenue of $130 million,
with a small profit, said one of the three sources.
The company recorded a post-tax profit of 246 million Indian
rupees ($3.15 million) for the year ended March 2021.
($1 = 78.0750 Indian rupees)
(Editing by Aditya Kalra and Jacqueline Wong)
((Sriram.Mani@thomsonreuters.com;))