FirstCry IPO: M&M, SoftBank, TPG Growth Set To Make Big Gains

Mahindra & Mahindra (M&M) is set to rake in the biggest gains from the initial public offering (IPO) of omnichannel kidswear brand FirstCry. The company is set to make almost a 6X return by selling over 28 Lakh shares of FirstCry as part of its offer for sale (OFS).

M&M held a total of 5.3 Cr shares, or a 10.97% stake, of the kids brand pre-offer. While the weighted average cost of acquiring the shares was INR 77.96, M&M is selling them at INR 465 apiece, translating to a 5.96X return.

The public issue of BrainBees Solutions Ltd, the parent entity of FirstCry, comprised a fresh issue of INR 1,666 Cr worth shares and an OFS component of 5.4 Cr equity shares. 

The startup set a price band of INR 440-465 for the IPO and was looking to raise INR 4,193 Cr. Its shares are likely to be listed on the BSE and the NSE on August 13.

It is pertinent to note that Mahindra Group acquired BabyOye and merged it with FirstCry in 2015. Mahindra Retail had picked up a minority stake in the startup during this time. In March 2021, Mahindra Retail owned a 10.48% stake in FirstCry, while Mahindra Engineering and Chemical Products held 3.11% in the startup via preference shares.  

Mahindra Engineering and Chemical Products and Mahindra Retail have since then merged with M&M.

Besides M&M, other major selling shareholders in the IPO are SoftBank, Premji Invest, Schroders Capital, TPG Growth and NewQuest Asia Investments.

Schroders Capital is the only investor exiting the startup by selling its 0.78% stake, or 38 Lakh shares, with a 3.2X return.

On the other hand, TPG, which holds a total of 8.76% stake in FirstCry via two funds – TPG Growth V SF Markets Pte. Ltd and NewQuest Asia Investments III Limited, is set to make a gain of 5.14X.

TPG Growth is offloading almost 39 Lakh shares for INR 465 apiece in the startup while the weighted average cost of acquiring these shares was INR 280.87 apiece, translating to a 1.66X return.

TPG’s NewQuest Asia is offloading 41.4 Lakh shares worth a total of INR 192.5 Cr. It spent INR 55.4 Cr for buying these shares, giving this fund a 3.48X return.

SoftBank’s SVF Frog (Cayman) Ltd is also looking at a 3X gain as FirstCry goes public. Out of the 12.4 Cr shares it holds in the startup, SVF is selling 2.03 Cr shares at INR 944.8 Cr.

The Japanese investment giant first invested in the Supam Maheshwari-led kidswear brand in 2019. Overall, SVF infused over INR 2,000 Cr in FirstCry till date and its pre-offer shareholding stood at 25.52%.

Last year, SoftBank had diluted around 2% of its stake in FirstCry ahead of the startup filing its draft papers for the IPO.

It is worth mentioning that SoftBank is set to make significant gains not only from FirstCry’s IPO but also from Unicommerce’s public listing. Besides, SoftBank also made 1.5X gain from the IPO of Ola Electric.

Meanwhile, Pi Opportunities Fund by Premji Invest, Apricot Investments, and Sage Investment Trust are set to make around 1.66X returns each.

 

Pratithi Investment Trust is offloading 2.2 Lakh shares of the startup as part of the OFS, which would translate to a 1.49X gain.

Satyadharma Investments and Trading Company is also set to make a 2.36X return on its investment in FirstCry.

Among the individual selling shareholders in the IPO are Ratan Tata, FirstCry founders Supam Maheshwari and Amitava Saha, and company CFO Gautam Sharma.

Founded in 2010 by Maheshwari and Saha, ecommerce unicorn FirstCry offers baby and kids products ranging from clothes to other essentials. 

A Quick Recap Of FirstCry IPO

FirstCry first filed its DRHP with the SEBI in December last year when it was looking to raise INR 1,816 Cr through a fresh issue of shares, which was reduced to INR 1,666 Cr in its red herring prospectus. However, the OFS component remained unchanged at 5.4 Cr equity shares.

FirstCry’s IPO was oversubscribed 12.22X, with investors cumulatively bidding for 60.64 Cr shares as against 4.96 Cr shares on offer. While the QIB portion was subscribed 19.30X, retail investors and NII portion saw 2.31X  and 4.68X subscriptions, respectively.

FirstCry will make its public market debut days after Ola Electric listed on the bourses. The EV startup made a flat debut on the exchanges on August 9.

On the other hand, Unicommerce is also likely to get listed on August 13.

Meanwhile, amid the IPO boom in the startup ecosystem, investors and analysts are focussing on the valuations and profitability of these startups. Like Ola Electric, FirstCry is also a loss-making entity.

In FY24, FirstCry’s loss declined almost 34% year-on-year (YoY) to INR 321.5 Cr, while operating revenue increased 15% YoY to INR 6,480.8 Cr.