Mamaearth parent IPO subscribed by 7.61 times as Day 3 ends

The initial public offering (IPO) of Honasa Consumer, the parent company of Mamaearth, has concluded with a flourish as institutional investors displayed robust enthusiasm on the final day of the offering. The IPO, which had faced a lukewarm response during the first two days, rallied to be oversubscribed, primarily driven by strong participation from institutional investors.

The overall subscription for Mamaearth’s IPO stood at 7.61 times the shares on offer, showcasing strong demand from investors. Notably, the Qualified Institutional Buyer (QIB) category led the way with a remarkable 11.5 times subscription, indicating strong institutional confidence in the brand. Retail investors showed a rather subdued interest, with 1.34 times subscription, and Non-Institutional Investors (NII) followed suit at 4.02 times by the end of the bidding period.

The issue size of the IPO amounted to ₹1701 crore, which includes a fresh share issue worth ₹365 crore as well, along with an offer for sale (OFS) of 4.12 crore shares by promoters and investors. November 2 was the third and final day of the IPO, and out of 2.89 crore shares on offer, the issue had received applications for 7.98 crore shares. Day 2 had seen the IPO be subscribed by 13% on Day 1 and 70% on Day 2, while the portion earmarked for retail investors portion was subscribed by 62% at that time. Similarly, the portion for the NIIs was subscribed by 9%, while the portion earmarked for QIBs were booked by 1.02 times.

Mamaearth founders Varun Alagh and Ghazal Alagh, along with investors Kunal Bahl, Shilpa Shetty, and Rishabh Mariwala, sold part of their stakes through the offer for sale. In particular, Alagh sold a total of 3,186,300 shares during the IPO. Investors have the opportunity to bid for a minimum of 46 shares in one lot, with multiples thereafter. The offering reserves about 75% of shares for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and the remaining 10% for Retail Investors. Employees can get a discount of ₹30 per equity share alongside a reservation of equity shares worth up to ₹10 crore.

Media reports state that the investor sentiment for Mamaearth remains positive, with the company’s shares reportedly trading at a premium of ₹9 in the unlisted market. The IPO was priced in the range of ₹308 to ₹324, and at the upper end of this range, the company’s valuation stands at nearly ₹10,500 crore. Prior to the IPO launch, Honasa Consumer had successfully raised ₹765 crore from anchor investors.

The funds generated through the IPO are expected to be allocated for various purposes. These include advertising expenses, capital expenditure to establish new exclusive brand outlets (EBOs), investments in subsidiary BBlunt for the expansion of new salons, and to cater to general corporate requirements. Additionally, a portion of the funds may be directed towards unidentified inorganic acquisitions.