FirstCry Parent Company Brainbees Files IPO Papers with SEBI; Prepares for Multi-Crore Stock Offering

FirstCry Parent Company, Brainbees, Files IPO Papers with SEBI; M&M to Sell 28 Lakh Shares

Brainbees Solutions, the parent company of the popular online e-commerce platform FirstCry, has officially submitted its application for an initial public offering (IPO) with the Securities and Exchange Board of India (SEBI). The move, confirmed on December 28, is set to be a significant milestone for the Pune-based company.

Also Read: Ratan Tata to Fully Divest Stake in FirstCry Parent Company Ahead of IPO

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FirstCry intends to raise an impressive sum of Rs 1,816 crore through a primary issue, as stated in the Draft Red Herring Prospectus (DRHP). Additionally, existing investors, including automotive giant Mahindra & Mahindra (M&M), private equity firm TPG, NewQuest Asia, and SoftBank, will collectively offer a total of 5.44 crore shares in Brainbees through an Offer for Sale (OFS).

Earlier reports from Moneycontrol had indicated that FirstCry was planning to secure a total of $500 million (approximately Rs 4,200 crore) through its IPO, with 60 percent of the funding coming from the OFS component and the remainder from the primary issuance. It’s important to note that FirstCry’s actual listing is expected to take place in 2024.

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The capital raised from the IPO will be utilized for expanding FirstCry’s network of stores and warehouses, as well as supporting international expansion efforts, as outlined in the DRHP.

Although the share price details have not yet been disclosed, FirstCry was targeting a valuation of approximately $3.5-3.75 billion for its IPO, which is slightly higher than the $3 billion valuation it achieved during its most recent private fundraising round.

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In addition to M&M and SoftBank, other stakeholders, including Apricot Investments, Valiant Mauritius, TIMF, Think India Opportunities Fund, Schroders, and PI Opportunities, are expected to divest a portion of their holdings in FirstCry, according to the DRHP submitted to SEBI.

M&M plans to sell a 0.58 percent stake, equivalent to 28 lakh shares, in Brainbees Solutions, while SoftBank is set to offload 2.03 crore shares as part of its ongoing efforts to adjust its holdings in the e-commerce giant. Recent reports indicated that SoftBank had already sold shares worth Rs 630 crore in FirstCry, with the shares being acquired by notable figures such as cricketer Sachin Tendulkar, Infosys co-founder Kris Gopalakrishnan, and Ravi Modi of Manyavar, among others.

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The DRHP also disclosed that FirstCry may consider a private placement of shares to specific investors, potentially raising up to Rs 363.20 crore.

In terms of financial performance, FirstCry reported a consolidated net loss that widened sixfold from Rs 79 crore in FY22 to Rs 486 crore in FY23, based on regulatory filings. However, its consolidated revenue witnessed an impressive 135 percent increase, reaching Rs 5,633 crore. This achievement places the SoftBank-backed company in the league of rare startups with revenues exceeding Rs 5,000 crore.

The actual share price for the IPO will be determined by Brainbees in consultation with the Book Running Lead Managers, once the price band is established. Notably, Kotak, Morgan Stanley, Bofa Securities, JM Financial, and Avendus are serving as the lead managers for FirstCry.

Also Read: Announced IPOs: Upcoming Big IPOs in India 2024

Looking ahead, the company acknowledged potential challenges, stating in its DRHP, “We cannot assure you that we will continue to grow our customer base at this rate or at all in the future. Further, if we fail to acquire new customers, or fail to do so in a cost-effective manner, we may not be able to maintain or increase our revenues or grow our operations.”

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