Brainbees Solutions, the parent company behind the well-known e-commerce platform FirstCry, has officially submitted its application for an initial public offering (IPO) to the Securities and Exchange Board of India (SEBI) on December 28. Reports indicate that the company is targeting a valuation in the range of $3.5-3.75 billion, with SoftBank holding the largest stake at 25.5%, making it the primary shareholder in FirstCry.
Key details from the Draft Red Herring Prospectus (DRHP) include:
**IPO Details:**
– The IPO comprises the issuance of fresh equity shares worth ₹1,816 crore and an offer for sale (OFS) by existing shareholders and promoters.
– Existing investors like Mahindra & Mahindra (M&M), TPG, NewQuest Asia, and SoftBank plan to collectively sell 5.44 crore shares in Brainbees through an OFS alongside the primary issue.
– SoftBank, as the largest stakeholder, will offload 2.03 crore shares, while Mahindra will sell its 0.58% stake.
– FirstCry may also consider a private placement of shares to certain investors for up to ₹363.20 crore.
**IPO Dates and Reservation:**
– Although the DRHP doesn’t specify the opening and closing dates for the IPO subscription, media reports suggest it will open in early 2024.
– The issue will follow the book-building process, with 75% of the issue available for allocation to qualified institutional buyers (QIBs), 15% to non-institutional investors (NIIs), and 10% to retail individual bidders.
**IPO Objectives:**
– Net proceeds from the IPO will be utilized for setting up new retail stores, expanding warehouses, and international expansion.
**Company Overview:**
– FirstCry, backed by SoftBank, offers toys, apparel, and accessories for babies, kids, and mothers through both online and physical stores.
– As of June 30, 2023, the company has over one million SKUs from 6,800 brands and a network of 936 modern stores across India.
**Financials:**
– In FY23, FirstCry reported a six-fold increase in net loss at ₹486 crore, with revenue from operations reaching ₹5,633 crore.
– The company faces competition from organized players such as Amazon, Flipkart, Hopscotch, Myntra, and others.
**Industry Overview:**
– India, with approximately 309 million children under 12, has a nascent childcare products spending per capita at ₹7,975 in 2022, projected to grow at a CAGR of around 15% from 2022 to 2027.
**Book-Running Managers:**
– Kotak, Morgan Stanley, BofA Securities, JM Financial, and Avendus are the book-running lead managers, with Link Intime India Private Limited serving as the registrar.
**Risks:**
– The company acknowledges potential risks related to expenses, marketing, expansion, retail distribution, and stock options that could adversely impact its financial condition.
FirstCry highlighted in its DRHP that uncertainties in acquiring new customers or doing so cost-effectively may impact revenue growth and overall operations.
