FirstCry is set to file its red herring prospectus (RHP) this week for an initial public offering (IPO), aiming for a valuation between $3 billion and $3.5 billion, according to sources familiar with the matter. This move will make Brainbees Solutions, the company behind FirstCry, the second major venture-backed, modern firm to enter the capital markets this year, following Ola Electric.
The offer size for FirstCry remains consistent with its draft IPO papers, targeting a primary fundraise of $217 million (Rs 1,816 crore). Additionally, the IPO will include an offer-for-sale (OFS) of 54 million shares. The startup, backed by Premji Invest and SoftBank, was valued at $2.8 billion in its last private funding round.
According to one source, “FirstCry will officially launch its IPO for subscription this week and plans to close it before August 15,” noting that the company has received significant interest from institutional investors for its anchor book.
Recent Indian internet IPOs have generally been priced at or below their last private round valuation, a trend seen with Go Digit and Ola Electric. This is a shift from the 2021 startup IPOs like Zomato, Nykaa, and Paytm, which were priced at substantial premiums. The volatility in global stock markets and caution from private investors regarding high valuations have caused technology-focused firms to steer clear of public markets and private funding over the past few years.
Ola Electric’s IPO, opening on August 2, is expected to be priced at a 25% discount to its last funding valuation of $5.4 billion. Meanwhile, FirstCry conducted a secondary transaction in August last year, where three family offices—Ranjan Pai’s Claypond Capital, Harsh Mariwala’s Sharrp Ventures, and Hemendra Kothari’s DSP family office—invested around Rs 435 crore.
FirstCry has been facilitating secondary financing over the past couple of years to provide early investors an exit. Valuation has not been a major issue, as new investors can exit at a higher price within a year. The OFS will see partial divestments from SoftBank Vision Fund, Premji Invest, Mahindra Retail, TPG Growth, and others.
The company refiled its IPO papers after the Securities and Exchange Board of India (SEBI) requested additional key performance indicators. According to the revised draft red herring prospectus (DRHP), FirstCry reported operating revenue of Rs 4,814 crore for the nine months ending December 2023, with a net loss of Rs 278 crore. It recorded gross sales of Rs 5,650 crore, with nearly 77% coming from online sales.
FirstCry operates 1,018 stores under the FirstCry and BabyHug brands in 508 cities, with 386 owned and the rest franchised. The company also manages in-house brands like Pine Kids, Cute Walk, and Babyoye. Proceeds from the IPO are intended for setting up stores and warehouses and expanding into Saudi Arabia. Globalbees, its brand aggregator subsidiary, reported a Rs 70-crore loss on revenue of Rs 910 crore for the first nine months of FY24.
