E-commerce startup FirstCry.com is reportedly planning to file draft red herring prospectus (DRHP) for its initial public offering (IPO) later this month. The company expects to raise around Rs 5,348 crore through the issue, Bloomberg reported quoting people familiar with the development.
According to the report, the Supam Maheshwari-led company is seeking a valuation of around Rs 45,840 crore.
FirstCry IPO would be a mix of fresh issuance and an offer for sale (OFS) from existing investors, it added.
Some of the early investors of FirstCry such as Chiratae Ventures, Vertex Ventures and Elevation Capital are also likely to sell their stake in the company. These investors hold around 7-9% stake each in FirstCry and are eyeing Rs 1,375 crore from the sale of this stake.
FirstCry plans to list on exchanges before the end of 2022.
The funds raised via the public issue would be utilised for mergers and acquisitions (M&A), media reports stated.
For its IPO, the SoftBank-backed Unicorn has appointed investment bankers Kotak Mahindra Capital and Morgan Stanley as the book running lead managers and is also in discussion with other bankers.
Other details of the FirstCry IPO, including size and timing, could change as the deliberations are still on.
FirstCry is an online marketplace for baby and kids’ products. It was launched in 2010 and initially focused on retailing baby products. In February 2020, FirstCry became a unicorn with Rs 2,261 crore Series E funding led by SoftBank. As of April 2022, the company has over 600 stores across India and has also expanded in the UAE.
In 2015, FirstCry rolled out its logistics division, XpressBees, into a separate company. In the same year, FirstCry acquired Mahindra Retail-owned BabyOye brand for Rs 362 crore. The merged entity now operates under the name FirstCry.com, a FirstCry Mahindra Venture. FirstCry also acquired playschool company Oi Playschool in 2019.
Its parent company Brainbees Solutions is valued at over Rs 1,528 crore now. SoftBank, the single largest shareholder in the company, holds around 30% stake. The company’s other investors include US-based private equity firm TPG and PremjiInvest, the private equity fund owned by former Wipro chairman Azim Premji.
National Investment and Infrastructure Fund (NIIF), the sovereign wealth fund of India, had proposed investment in FirstCry as a part of a broader funding round of Rs 1,833 crore. This funding round was also approved by the fair market regulator Competition Commission of India (CCI) in February.
However, according to media reports, this funding round failed and company’s existing investors PremjiInvest stepped in to buy the stake that NIIF was supposed to purchase in a deal that valued FirstCry at around Rs 22,920 crore.
As per FirstCry’s latest filings, it turned profitable in the financial year ended March 2021 after the COVID pandemic accelerated the shift to online shopping.
The Pune-based company posted a profit of Rs 215.94 crore in FY21. According to media reports, the company expects to double its profit in FY22, which will be reflected in its DRHP. The company had posted a loss of Rs 190.8 crore. Its consolidated revenue had jumped to Rs 1,740 crore from Rs 897 crore in FY20.
Note: ($1 = Rs 76.40)
What is IPO?
IPO or initial public offering is a process by which a private company raises funds from the general public for the first time. After the IPO, shares of the company are listed on exchanges and can be traded just like any other common stock.
What is DRHP?
If a company wishes to go public, it has to file a Draft Red Herring Prospectus (DRHP) with market regulator SEBI. This document contains all the information about the company such as financials, issuance objectives, business operations, holding, market valuation, and other important information which will help potential investors make an informed decision about investing in the company.