FirstCry, an Indian retailer specializing in baby products and backed by investors like SoftBank, TPG, and Mahindra and Mahindra, is facing a setback in its plans to go public.
The company, which had filed for an IPO aiming to raise up to $500 million, is reportedly pulling back its papers due to concerns raised by India’s market regulator, the Securities and Exchange Board of India (SEBI).
SEBI has questioned FirstCry’s disclosure of key metrics to potential investors, citing non-compliance with regulations requiring the sharing of all significant business data from the past three years.
This scrutiny follows a regulatory change implemented in 2022, aimed at tightening oversight of IPO-bound companies, particularly those with substantial losses but high valuations.
FirstCry’s performance indicators, such as average order value, annual transacting customers, and number of orders, are among the metrics under scrutiny. The company had initially planned to raise $215 million through new shares and an additional $300 million through the sale of existing shares.
In response to SEBI’s concerns, FirstCry is expected to withdraw its IPO papers, revise them to meet regulatory requirements, and refile them, possibly as early as next week.
This delay comes at a time when the company is grappling with significant losses, which surged sixfold to $57.6 million for the fiscal year ending March 31, 2023. Despite the losses, FirstCry’s total income more than doubled during the same period, reaching $684 million.
This development underscores the heightened scrutiny faced by companies seeking to go public in India, as regulators aim to ensure transparency and compliance with regulations, particularly concerning financial disclosures and key performance metrics.
