Skincare startup Mamaearth has put its plans for an initial public offering (IPO) on hold due to poor market conditions, a month after two other firms cancelled their share sales as well.

What Happened? According to a Reuters report, Mamaearth’s parent company, Honasa Consumer Ltd, submitted its paperwork for an IPO in December 2022, intending to raise between $200 million (₹1,647.07 crore) to $300 million (₹2,470.60 crore) by issuing new equity and providing some current shares for sale.

The IPO could have valued the company at a maximum of $3 billion (₹24,704.73 crore).

Per Reuters’ sources, Mamaearth has postponed its initial public offering (IPO) due to weak market conditions but still intends to list on the stock exchange. The company, which has until December to obtain approval from the Securities and Exchange Board of India (SEBI) and submit its final prospectus, will wait for more favourable market conditions before re-evaluating its strategy.

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The sources have also added that if the sentiment improves, Mamaearth may begin its marketing process by October. Although Varun Alagh, CEO of Mamaearth, did not directly comment on delaying the IPO, he stated that the company focused on the long-term and not solely on short-term valuations.

Why It Matters? According to the report, investors, including Sequoia Capital and Sofina from Belgium, are taking a “wait and watch mode” approach amidst concerns about the financial health of banks and the turbulence in global stock markets.

The company, founded in 2016 by Varun and Ghazal Alagh, has been focusing on the burgeoning beauty and personal care market in India.

The company’s IPO papers state that the market is expected to grow to $30 billion (₹2,47,037 crore) by 2026, and Mamaearth has been growing at a rate of 12% per year. As of January 2022, investors valued the company at $1.2 billion (₹9,881.59 crore).

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