Can Shilpa Shetty make Mamaearth as successful as Nykaa was for Katrina Kaif and Alia Bhatt?

While Katrina Kaif and Alia Bhatt received a 10x return on their Nykaa investments, it is unknown how much Bollywood actor Shilpa Shetty would make when she exits Mamaearth through an initial public offering (IPO).

Bollywood actor Shilpa Shetty made news when Honasa Consumer Ltd, which owns modern FMCG brands including Mamaearth and The Derma Co, submitted preliminary documents with markets regulator Sebi to raise money through an initial public offering. The Gurugram-based business said that the well-known actor is one of its original investors and plans to leave the business once it is publicly listed.

According to the draft red herring prospectus, Shetty invested 6.7 crore rupees in the business and bought more than 16 lakh shares at a price of 41.86 rupees each. Shetty made his initial investment in Mamaearth in 2018, back when the company exclusively offered baby care goods. When the firm is listed, it is unclear how much money she will have made from her investment. The IPO consists of an offer-for-sale (OFS) component of 4,68,19,635 equity shares from the promoters, investors, and other selling shareholders as well as a fresh issue of equity shares for Rs 400 crore.

Along with the Baazigar actor, other people selling shares in the OFS include the promoters Varun Alagh and Ghazal Alagh, as well as investors Fireside Ventures Fund, Sofina, Stellaris, Rohit and Kunal Bansal, and Rishabh Harsh Mariwala of the FMCG company Marico.

The husband-and-wife team of Varun and Ghazal Alagh launched the beauty and personal care business in Gurugram in 2016. Mamaearth was the first brand introduced, and over time it expanded its portfolio to include The Derma Co., Aqualogica, Ayuga, BBlunt, and Dr. Sheth’s. It also created a “House of Brands” architecture. The company joined the unicorn club in January 2022.

Shetty won’t be the first Bollywood actor in recent memory to make an investment in a business that ultimately went public. Popular Bollywood celebrities like Katrina Kaif and Alia Bhatt invested in the startup Nykaa, a retailer of cosmetic products, early on. Nykaa was the only profitable company among the new-age digital companies that were offered in 2021, and as a result, it was placed on the markets on November 10, 2021, after receiving a record-breaking 82 subscriptions.

On November 10, 2021, the value of Alia Bhatt’s shares in Nykaa was projected to be Rs 54 crore. In July 2020, the Brahmastra actor invested Rs 4.95 crore in FSN E-Commerce Ventures, the parent firm of Nykaa. In 2018, Katrina Kaif and the business formed a joint venture to launch Nykaa-KK Beauty, which sells the actor’s cosmetic line Kay Beauty. The actor from Tiger Zinda Hai contributed Rs 2.04 crore to the business. On November 10, 2021, the value of her shares was Rs 22 crore.

Since the announcement of the bonus issue and the company’s lock-in period expiring for pre-IPO investors, the Nykaa stock has been continuously sold off. From its adjusted 52-week high of Rs 364.16 and over 56% in 2022, Nykaa stock is down more than 58 percent.

Veteran actor Amitabh Bachchan is the earliest example of a Bollywood actor making money at the markets.

In just 4 months in 2013, Bachchan’s stock value in Just Dial increased by a staggering 10,190% from an initial investment of Rs 6.27 lakh (Rs 10 per share) to Rs 6.45 crore (Rs 1,028 per share).