FirstCry to raise ₹4,194 cr via IPO at price band of ₹440-465; issue to open on Aug 6

SoftBank-backed e-commerce unicorn Brainbees Solutions, the parent of FirstCry, has set a price band of ₹440-465 per share for its initial public offerings (IPO), which will open for subscription on August 6. The three-day IPO of the country’s biggest retailer in the mother and childcare segment will close on August 8, while shares are expected to list on the BSE and NSE on August 13. The anchor book will open for a day on August 5, prior to the opening of the issue. If successful, this will be the first public listing by a large e-commerce firm after Nykaa’s debut on the stock exchanges in 2021.

FirstCry looks to raise ₹4,193.73 crore at the upper end of the price band, which comprises fresh equities worth ₹1,666 crore and an offer for sale (OFS) of up to 5.2 crore shares with a face value of ₹5 per share. At the upper price band of ₹465, the OFS amount will be ₹2,527.73 crore.

Under the OFS, Mahindra and Mahindra, SVF Frog (Cayman), PI Opportunities Fund- 1, TPG Growth V SF Markets Pte. Ltd, NewQuest Asia Investments III, Apricot Investments, Valiant Mauritius Partners FDI, TIMF Holdings (Mauritius), Think India Opportunities Master Fund LP (Cayman), Schroders Capital Private Equity Asia Mauritius II will be offloading their stakes.

The lot size of the IPO is 32 shares and in multiples thereafter. The minimum application amount for retail investors is ₹14,880 for 1 lot, while the maximum is ₹193,440 for 13 lots.

As per the revised document filed with market regulator SEBI, the company has reserved 75% of the issue for qualified institutional buyers (QIB), up to 15% for non-institutional institutional investors (NII), and the remaining 10% for retail investors.

Founded in 2010, Brainbees Solutions first filed the draft red herring prospectus (DRHP) in December last year, which was returned by the regulator due to insufficient disclosure of key performance indicators (KPIs). The country’s largest multi-channel retailing platform for mothers, babies and kids products refilled the IPO papers in April, which was approved by the SEBI in the last week of June.

Out of a fresh issue size of ₹1,666 crore, FirstCry proposes to use ₹388 crore for investment in its Indian subsidiary, Digital Age, which was acquired on May 2, 2022. The fund will be utilised for setting up new modern stores under the FirstCry brand and other home brands as well as lease payments for its existing identified modern stores owned and controlled by Digital Age.

Meanwhile, ₹173 crore will be invested in its subsidiary, Globalbees Brands, for acquiring additional stake in the step-down subsidiaries. The company will invest another ₹150 crore on sales and marketing initiatives and ₹57.6 crore in technology and data science costs.

FirstCry, which currently operates warehouse facilities and logistics operations in the UAE and KSA, will invest ₹155.6 crore to further solidify its position in key markets in the Middle East. The company will use ₹72.6 crore for setting up 12 new modern stores in KSA and ₹83 crore towards setting up new warehouses in Riyadh, Jeddah, and Dammam, KSA, measuring an aggregate of around 0.25 million square feet, the DRHP highlighted.

The company expanded overseas by commencing operations in UAE and KSA in 2019 and 2022, respectively. It operates as an online platform, offering products in various categories, including apparel, footwear, baby gear, nursery, diapers, toys and personal care, amongst others, with more than 262,000 stock-keeping units (SKUs) from over 3,600 brands, including global brands, home brands and third-party Indian brands. It also operates its warehousing facilities and logistics operations in the UAE and KSA.

Established in 2010 by Supam Maheshwari and Amitava Saha, FirstCry platform was launched to create a one-stop destination for parenting needs. The company offers products in various categories, including apparel, footwear, baby gear, nursery, diapers, toys and personal care. The multi-channel retailing platform includes FirstCry online as well as physical stores comprising franchisee-owned, franchisee-operated modern stores, company-owned and company-operated modern stores as well as general trade retail distribution.

As of June 30, 2023, the company offers more than one million stock-keeping units (SKUs) from over 6,800 brands, including prominent third-party Indian brands, global brands, and their own home brands. It has a network of 936 FirstCry and BabyHug modern stores in 465 cities in 27 states and four union territories across India with over 1.76 million square feet of retail space, as of June 30, 2023.

Over the financial years 2021 to 2023, FirstCry's consolidated revenue from operations has grown from ₹1,602.85 crore in FY21 to ₹2,401 crore in FY22, and further to ₹5,632.54 crore in FY23. The revenue growth was driven by both organic growth and inorganic growth (in particular, the acquisition of Digital Age in May 2022).

However, the losses of the company ballooned more than 6 times to ₹486 crore in FY23 as compared to ₹79 crore in FY22, dented by higher expenses. The total expenses surged 146% to ₹6,316 crore in FY23 from ₹2,568 crore in the last fiscal. The cost of procurement of materials, which accounted for 62% of the overall cost, rose 2.5 times YoY to ₹3,935 crore, while employee benefits and advertising spent grew by 127% and 55%, respectively in FY23.

Ahead of the IPO, Japanese conglomerate SoftBank sold shares worth $310 million (around ₹630 crore) in FirstCry in two rounds. SoftBank is the largest shareholder and holds around 25% stake in the ecommerce company currently. The stake sale paved the way for family offices and investment firms to pick up shareholding in the firm. Recently, Infosys co-founder Kris Gopalakrishnan, TVS group family, Ravi Modi of ethnic wear brand Manyavar, and Family offices of Indian cricketer Sachin Tendulkar invested in the company. Besides, Marico’s Harsh Mariwala’s Sharrp Ventures, Manipal Group’s Ranjan Pai’s MEMG Family Office, and Hemendra Kothari's DSP family office also picked shares in FirstCry.