SoftBank-Backed FirstCry Plans To Mop Up INR 363 Cr In Pre-IPO Placement

SoftBank-backed online omnichannel retail startup FirstCry has filed its draft red herring prospectus (DRHP) with the capital markets regulator Securities and Exchange Board of India (SEBI) for raising INR 1,816 Cr via fresh issues of shares. 

The initial public offering (IPO) offer also comprises an offer-for-sale (OFS) complement which will allow the startup’s existing shareholders to sell up to 5.43 Cr equity shares.

Besides, the company is also eyeing a pre-IPO private placement of equity shares to investors for an amount aggregating not more than INR 363 Cr. The amount raised in the pre-IPO round will be reduced from the fresh issue.

Pre-IPO placements, conducted months before the startup goes public, help in establishing a valuation base for an IPO and instil confidence among investors. The proceeds from pre-IPO placement will eventually contribute to the net proceeds of the IPO.

The startup’s IPO net proceeds will be used for the following:

• Expenditure for setting up new modern stores and warehouses, as well as lease payments for our existing modern stores in India, totalling INR 648 Cr.
• Investment in the company’s subsidiary FirstCry trading for overseas expansion via setting up new modern stores in Saudi Arabia totalling INR 155.6 Cr.
• INR 170.5 Cr as an investment in subsidiary Globalbees Brands towards the acquisition of an additional stake in the company’s indirect subsidiaries.
• Investment for sales and marketing initiatives to the tune of INR 100 Cr.
• Technology and data science cost of INR 57.6 Cr.
• The rest would be for funding inorganic growth through acquisition, other strategic initiatives and general corporate purposes.

Earlier this month, coworking space startup Awfis which filed DRHP to raise INR 160 Cr announced it might raise INR 32 Cr as pre-IPO placement ahead of filing its RHP. In another instance, Bhavish Aggarwal-led Ola Electric, which is heading for a mega IPO to raise upto INR 5,500 Cr via fresh issues of shares, in its DRHP has stated that it might also consider raising upto INR 1,100 Cr via pre-IPO Placement. 

In the first three months of FY24, Brainbees Solutions Limited, the parent entity of FirstCry reported sales of INR 1,406.9 Cr on a consolidated basis. In the Q1 of FY24, the startup incurred a net loss of INR 110.4 Cr. During the same period, the startup spent INR 904.4 Cr for procurement of materials and INR 164.5 Cr for advertisement.

The Pune-headquartered startup has raised over $700 Mn in multiple rounds till date and counts the likes of SoftBank, Chrys Capital and Vertex Ventures as among its backers.