FirstCry DRHP: Here’s How The Ecommerce Unicorn Intends to Spend IPO Proceeds

After much speculation, Brainbees Solutions Limited, the parent company of kids-focused ecommerce unicorn FirstCry, has filed its draft red herring prospectus (DRHP) with the markets regulator Securities and Exchange Board of India (SEBI). 

The startup’s initial public offering (IPO) will comprise a fresh issue of shares worth INR 1,816 Cr and an offer-for-sale (OFS) component of up to 5.43 Cr shares.

SoftBank will offload the highest number of shares in the Pune-based omnichannel marketplace’s IPO. As per the draft papers, the Japanese investor will be selling up to 2 Cr shares as part of the OFS component of the public issue. Besides SoftBank, several others, including Mahindra & Mahindra, Premji Invest, private equity investor TPG, Apricot Investments and NewQuest, are also offloading their stakes in the IPO.

The company is also eyeing a pre-IPO private placement of equity shares to investors for an amount aggregating up to INR 363 Cr. The amount raised in the pre-IPO round will be reduced from the fresh issue.

In its DRHP, the ecommerce unicorn also highlighted several areas where it would deploy the funding raised via the public issue.

Where Will FirstCry’s IPO Money Go?

FirstCry plans to set up new retail stores and warehouses and undertake international expansion. It will invest INR 648 Cr from the IPO proceeds for setting up modern stores and warehouses and making lease payments for existing stores.

Further, the startup will invest INR 155.6 Cr in its foreign subsidiary for overseas expansion. The startup said it would set up modern stores in Saudi Arabia. However, it did not specify the details, such as the number of stores it plans to open in the Middle Eastern country.

Additionally, FirstCry intends to invest INR 170.5 Cr in subsidiary Globalbees Brands for acquiring an additional stake in the company’s indirect subsidiaries. The startup will also invest INR 100 Cr for sales and marketing initiatives and another INR 57.6 Cr in technology and data science.

According to the DRHP, the rest of the IPO proceeds would fund inorganic growth and other corporate purposes.

In FY23, FirstCry’s net loss surged over 500% to INR 486 Cr from INR 78.6 Cr in the previous fiscal year. Notably, the startup had logged a net profit of INR 215.9 Cr in FY21. The startup clocked sales of INR 5,632.5 Cr in FY23, 135% higher than INR 2,401.2 Cr in FY22.

Additionally, in Q1 of FY24, FirstCry recorded a net loss of INR 110.4 Cr on consolidated sale of INR 1,406.9 Cr.

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