Tech3 | Mamaearth IPO: Will it sizzle or fizzle?; BharatPe's arc after Ashneer Grover and more

Just In: Paytm founder Vijay Shekhar Sharma launches a $4 million fund to invest in India-based AI, EV startups.

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One quick thing: Reliance Industries is close to buying Disney’s India operations, according to Bloomberg

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·???????? Meanwhile, Disney+ Hotstar set a new global live streaming viewership record yesterday

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In today’s newsletter:?

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·???????? Mamaearth IPO: Will it sizzle or fizzle?

·???????? Coming soon: A KYC overhaul for loan apps

·???????? BharatPe's arc after Ashneer Grover

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Programming note: There will be no edition of MCTech3 tomorrow (October 24) on the occasion of Dussehra. We hope you and your family also have a great holiday. We’ll be back in your inbox on Wednesday!

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Mamaearth IPO: Will it sizzle or fizzle? Mamaearth was the first unicorn of 2022 and it now hopes to be the first new-age company to go public amid the ongoing funding winter.

What’s the news? Mamaearth parent plans to launch its much anticipated public offering on October 31, prior to Diwali, industry sources tell us. It had filed draft IPO papers in December last year.

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·???????? The company seeks to raise Rs 1,700 crore in a combination of fresh issue and offer-for-sale in the offering.

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The rethink: Sources tell us Mamaearth is now valuing itself at roughly Rs 10,500 crore (～$1.3 billion), a big reset from the $3 billion that it was reportedly eyeing around June 2022.?

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·???????? The fresh valuation of $1.3 billion is also lower than $1.5-$1.7 billion that Mamaearth was commanding during its pre-IPO round.

That said, the pre-IPO round of $150 million is unlikely to happen now since stakeholders are confident the IPO will sail through and provide an exit to early investors, sources told us.

Valuation puzzle: Mamaearth had to temper down valuation expectations since it seemed massively overvalued when compared to traditional companies.?

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·???????? A valuation of $3 billion meant Mamaearth wanted a price to earnings (P/E) multiple of 1,714X?

That was a sharp contrast when compared to peers. Traditional companies like Hindustan Unilever, Godrej Consumer and Marico have a P/E ratio of anywhere between 50 and 65X only.?

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The bottomline: Indian startups, particularly those who delayed their IPOs due to the market downturn, will be closely watching how the market reacts to this public offering to figure out their own listing plans.

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Dig deeper

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P.S. You can also watch our interview with Mamaearth founders Varun And Ghazal Alagh last year wherein they spoke about what inspired them to start up, how every product is tested and IPO plans.

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