Can Shilpa Shetty do with Mamaearth what Katrina Kaif, Alia Bhatt did with Nykaa?

When Honasa Consumer Ltd, which owns new-age FMCG brands like Mamaearth and The Derma Co, filed preliminary papers with markets regulator Sebi to raise funds through an initial public offering, the name that made the most headlines is Bollywood actor Shilpa Shetty. The Gurugram-based company said the popular actor is one of its early investors and is looking to exit the company when it gets publicly listed.

As per the draft red herring prospectus, Shetty invested Rs 6.7 crore in the company and has acquired over 16 lakh shares at Rs 41.86 apiece. Shetty first invested in Mamaearth in 2018, when the startup used to sell only babycare products. It remains to be seen how much she will make from her investment when the company gets listed. The IPO comprises a fresh issue of equity shares worth Rs 400 crore and an offer-for-sale (OFS) component of 4,68,19,635 equity shares by promoters, investors, and other selling shareholders.

Apart from the Baazigar actor, those offering shares in the OFS include promoters -- Varun Alagh and Ghazal Alagh -- and investors like Fireside Ventures Fund, Sofina, Stellaris, Kunal Bansal and Rohit Bansal, Rishabh Harsh Mariwala of FMCG firm Marico.

The Gurugram-based beauty and personal care company was founded in 2016 by the husband-wife duo Varun and Ghazal Alagh. It began with the launch of Mamaearth and over the years added five more brands to its portfolio, including The Derma Co, Aqualogica, Ayuga, BBlunt and Dr Sheth's, and built a 'House of Brands' architecture. In January 2022, the company entered the unicorn club.

Shetty won't be the first Bollywood actor in recent times to invest money in a company that eventually got publicly listed. Popular Bollywood actors like Katrina Kaif and Alia Bhatt were early investors in beauty retailing startup Nykaa. Nykaa got listed on markets on November 10, 2021 after it got subscribed a whopping 82 times as it was found to be the only profitable company among all the new-age tech firms that got listed in 2021.

Alia Bhatt’s shareholding in Nykaa was estimated to be worth Rs 54 crore on November 10, 2021. The Brahmastra actor had invested Rs 4.95 crore in the parent company of Nykaa, FSN E-Commerce Ventures, in July 2020. Katrina Kaif entered into a joint venture with the company in 2018 to set up Nykaa-KK Beauty, which retails the actor's cosmetic brand Kay Beauty. The Tiger Zinda Hai actor had invested Rs 2.04 crore in the company. Her shares were worth Rs 22 crore on November 10, 2021.

The Nykaa stock has been under relentless selling pressure ever since the company's lock-in period expired for pre-IPO investors and the bonus issue announcement. Nykaa stock is down over 58 per cent from its adjusted 52-week high of Rs 364.16 and over 56 per cent in 2022.

The earlier precedent of a Bollywood actor minting money at stock markets is veteran actor Amitabh Bachchan.

Bachchan's stock value in Just Dial had shot up by a whopping 10,190 per cent, rising from an initial investment of Rs 6.27 lakh (Rs 10 per share) to Rs 6.45 crore (Rs 1,028 per share), in a span of just 4 months in 2013.