Honasa Consumer Limited, the parent company of Mamaearth, filed its Draft Red Herring Prospectus (DHRP) on Thursday with the market regulator Securities and Exchange Board of India (SEBI) to raise funds through an initial public offering (IPO). According to the DHRP, the company has proposed a fresh issue of equity shares up to INR 400 crore and an offer for sale (OFS) component by a number of outside investors and individual shareholders up to 46,819,635 shares.

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The selling shareholders in the OFS would include Varun Alagh (up to 3,186,300 shares) Ghazal Alagh (100,000 shares), Rohit Kumar Bansal, Actor Shilpa Shetty Kundra (554,700), Sofina Ventures (19,133,948), Kunal Bahl, Snapdeal founder (up to 777,672 shares), Rishabh Harsh Mariwala, Stellaris Venture Partners (12,755,965), Evolvence India Coinvest PCC, ( 2,20,613 shares invested through its Cell E), Fireside Ventures among others.

The combined size of the IPO could range between INR 2,400 crore and INR 3,000 crore, though the exact quantum at the time of listing would depend on final valuations. The plan is to launch the deal in March next year but that timeline is subject to market conditions, according to the report.

The investment banks working on the IPO are Kotak Mahindra Capital, JM Financial, Citi and JP Morgan, and Cyril Amarchand Mangaldas, Indus Law and Khaitan & Co are the legal advisors, as per the report.

The report also revealed that Sequoia Capital that holds nearly 20% stake in Mamaearth is not participating in OFS.

According to the DHRP, the company said that its focus on the BPC category twinned with their strengths in brand building, customer-centric innovation, and digital-first distribution has enabled it to establish a strong presence in the BPC market in India. Furthermore, the company intends to utilize the net proceeds of the IPO for advertising expenses to improve brand visibility and awareness, setting up new exclusive brand outlets amounting to INR 186 crore, capital expenditure for setting up new EBOs amounting to INR 34.23 crore and investment in its subsidiary BBlunt for put together new salons amounting to INR 27.52 crore.

It further revealed that the equity shares that will be offered through the Red Herring Prospectus are planned to be listed on the BSE and NSE. The company said, “Any dividends in respect of our equity shares will also be paid in Indian rupees and subsequently converted into the relevant foreign currency for repatriation. Any adverse movement in currency exchange rates during the time that it takes to undertake such conversion may reduce the net dividend to foreign investors.”

Mamaearth, a fastest-growing D2C company that produces beauty, babycare and skin care products, by Varun Alagh and his wife Ghazal Alagh in 2016.

“We are the largest digital-first BPC (beauty and personal care) company in India in terms of revenue from operations for the financial year 2022. We have a portfolio of six BPC brands with differentiated value propositions and as of September 30, 2022, our flagship brand, Mamaearth, has emerged as the fastest growing BPC brand in India to reach an annual revenue of INR 10 billion in the preceding 12 months within six years of launch,” the company added.