SUMMARY
Pai is being touted to invest around INR 250 Cr (around $30 Mn) in FirstCry as part of a $60 Mn secondary share sale
FirstCry would be Pai’s third key investment in Indian startups recently, having prepared an investment in BYJU’S Aakash and PharmEasy
FirstCry is planning to reduce foreign shareholding below 51% to comply with Indian FDI laws for ecommerce ahead of its 2024 IPO
Ranjan Pai, the chairman of the Manipal Group, is in advanced talks to pick up a stake in the IPO-bound children-focused ecommerce major firstcry
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Pai is being touted to invest around INR 250 Cr (around $30 Mn) in FirstCry as part of a $60 Mn secondary share sale at the ecommerce giant at a valuation of around $3 Bn, ET said in a report citing sources.
The Manipal Group chairman will be joined by other investors for the secondary share sale, and the secondary share sale is expected to be completed soon. To be sure, none of the funding will reach FirstCry’s coffers as a secondary share sale is a transaction between incoming and outgoing investors.
FirstCry would be Pai’s third key investment in an Indian startup recently, having already prepared an $80 Mn investment in edtech giant BYJU’S test prep arm Aakash. Pai has been an investor in BYJU’S previously through Aarin Capital, but the fund exited the edtech giant years ago.
Ranjan Pai is also looking to pick up a stake in PharmEasy during the latter’s planned rights issue, alongside Aakash and FirstCry.
FirstCry has been looking to increase local investor ownership at the captable and dilute foreign shareholders. The move is all the more relevant when given that the kids-centred ecommerce major is looking to go for a public listing in 2024. The startup has to keep its foreign shareholding below 51% in line with India’s FDI laws for ecommerce.
FirstCry had finalised its plans to file its draft papers for a public issue of as much as $1 Bn but put those plans in cold storage due to market volatility in 2022.
The unicorn is also on the list of portfolio firms of SoftBank in India slated to go public next year, alongside Swiggy, Lenskart and OfBusiness. In an interview with ET on August 9, Navneet Govil, executive managing partner and CFO of SoftBank Vision Fund, said FirstCry is expected to file its draft IPO paper before the end of 2023.
Incidentally, SoftBank is FirstCry’s largest shareholder, with a 29% stake. The Japanese investment firm has been looking to dilute its stake to under 26% so it doesn’t get classified as a promoter of the parent firm of the omnichannel retailer, Brainbees Solutions.
Other major stakeholders in FirstCry include Premji Invest (9-11% stake), Mahindra Retail (12-13% stake) and TPG (6-7% stake).
FirstCry slipped into the red in FY22, reporting a net loss of INR 78.7 Cr, after reporting a net profit of INR 215.9 Cr in FY21. Despite the loss, the unicorn’s sales revenue jumped 50% to INR 2,401.3 Cr from INR 1,602.8 Cr in FY21.
