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Mamaearth’s parent company still in talks with Sebi on IPO; awaits approval

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The clarification comes after certain media reported that the company has put its initial public offering (IPO) on hold amid weak market conditions

New Delhi: Honasa Consumer Ltd, which owns FMCG brands Mamaearth and The Derma Co, on Monday said it is still in conversation with Sebi on its preliminary IPO papers and awaiting approval from the capital markets regulator.

The clarification comes after certain media reported that the company has put its initial public offering (IPO) on hold amid weak market conditions.

In a statement, Mamaearth CEO and co-founder Varun Alagh said, “We are still engaging with Sebi on our DRHP and awaiting formal approval for the same. Post the approval as is in line with the regulations we will have 12 months to file RHP and take the company public, which we will do in consultation with our bankers.”

Honasa Consumer filed its draft papers with Sebi in December last year to raise funds through an initial share-sale. The proposed IPO comprises fresh issue of equity shares worth up to Rs 400 crore and an offer for sale (OFS) of up to 46,819,635 shares by promoters and existing shareholders.

Those selling shareholders in the OFS would include promoters and co-founders — Varun Alagh and Ghazal Alagh — bollywood actor Shilpa Shetty Kundra, Rohit Kumar Bansal, Sofina Ventures and Kunal Bahl.

Alagah also said, “Pricing and valuations will be discovered as part of our marketing roadshows as we start them. As discussed during our meeting neither is our largest investor selling a single share and also the promoters will continue to own over 97 per cent of their ownership in the company after the IPO hence we have no interest in optimizing for short term valuations, we are in this for the long term.”

After the Paytm’s IPO fiasco, Sebi has turned cautious while giving clearance to the initial share sales as it has returned the preliminary papers of half a dozen companies, including Oravel Stays, which operates hospitality chain OYO, in this year (till March 10).

These companies have been asked to re-file their draft red herring prospectus (DRHP) with certain updates.

Sebi has become stricter in its approach while giving its go-ahead to IPOs after investors lost their money in some of the high-profile initial shares in 2021 and according to data compiled by Primedatabase.com, the average time taken by the markets regulator in approving an IPO in 2022 was 115 days.

One97 Communications, the parent entity of digital payments firm Paytm, made a disappointing debut on the bourses in November 2021. The company’s Rs 18,300-crore IPO was the biggest on Dalal Street after Coal India. The digital payment firm stock was still trading 70 per cent lower from its issue price.

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