FirstCry: FirstCry set to file final papers for $3-3.5 billion IPO

FirstCry is expected to file its red herring prospectus (RHP) this week, for an initial public offering (IPO) valuing the baby and mother care products retailer at $3-3.5 billion, people aware of the matter said.After Ola Electric, Brainbees Solutions, which runs the brand, will be the second major venture-backed, new-age firm to tap the capital markets this year.

FirstCry’s offer size remains unchanged from that stated in its draft IPO papers, at $217 million (Rs 1,816 crore) of primary fundraise.

Strong anchor book

There will also be an offer-for-sale (OFS) of 54 million shares. The Premji Invest and SoftBank-backed startup was valued at $2.8 billion in its last private funding round.

“FirstCry will launch its IPO for subscription officially from this week, and wants to close it before August 15,” said one of the persons aware of the matter, adding that it has received strong interest from institutional investors for its anchor book.

FirstCry chief executive Supam Maheshwari didn’t respond to ET’s queries.

The new breed of Indian internet IPOs have typically priced themselves similar to their previous private round valuation or lower, as in the case of insurer Go Digit and electric two-wheeler maker Ola Electric. This is in contrast to the first set of startup IPOs in 2021, such as Zomato, Nykaa and Paytm that commanded substantial premiums.

After a wave of listings three years ago, technology-first firms stayed away from the public markets as well as private funding due to volatility in stock markets globally, as well as private investors’ caution over rich valuations.

Ola Electric’s IPO, opening on August 2, will likely be priced at a discount of 25% to its last funding valuation of $5.4 billion, ET first reported on July 16.

Secondaries at play

Pune-headquartered FirstCry conducted a secondary transaction in August last year when three family offices—Ranjan Pai’s Claypond Capital, Harsh Mariwala’s Sharrp Ventures and Hemendra Kothari’s DSP family office—invested about Rs 435 crore.

“They (FirstCry) have been facilitating secondary financing for the last couple of years to give early investors an exit. Valuation has not been a major concern, as new investors can exit at a higher price within a year,” said one of the people cited earlier.

SoftBank Vision Fund, Premji Invest, Mahindra Retail, TPG Growth and others will be part-divesting through the OFS.

FirstCry refiled its IPO papers following regulator Securities and Exchange Board of India’s directive for additional key performance indicators. According to its revised draft red herring prospectus (DRHP), the retailer reported operating revenue of Rs 4,814 crore for the nine months ended December 2023, with a net loss of Rs 278 crore. It clocked gross sales of Rs 5,650 crore, nearly 77% of which are online.

The company runs a network of 1,018 FirstCry and BabyHug stores in 508 cities. The company owns 386, and the rest are franchises. Pine Kids, Cute Walk and Babyoye are among its in-house brands.

In its initial DRHP, FirstCry had said it would use the IPO proceeds from sale of fresh shares for setting up stores and warehouses, and expand into Saudi Arabia. Globalbees, its brand aggregator subsidiary, recently reported a Rs 70-crore loss on revenue of Rs 910 crore for the first nine months of FY24.