After months of speculations, Japanese conglomerate SoftBank has committed $395.7 Mn (INR 2,824 Cr) in a Series E round of Pune-based online baby products omnicommerce retailer Firstcry.
According to a Ministry of Corporate Affairs filings accessed by Inc42, out of the total investment, SoftBank has already paid $149.2 Mn (INR 1,064.9 Cr) and is expected to transfer the remaining $246.49 Mn (INR 1,759.2 Cr) as and when called for in the next two years.
SoftBank Vision Fund Frog based in the Cayman Islands has bought 73,166,655 equity shares in Series E round of Brainbees Solutions Pvt Ltd, the parent company of Firstcry at a nominal value of INR 5 with a premium of INR 381 ($5.35) per share. According to data platform paper.vc, the company has now been valued at about $849 Mn.
Talking to Inc42, Vivek Durai, founder, paper.vc, said that with this deal, SoftBank has locked in FirstCry’s valuation at INR 386 ($5.42) per share for the next two years through an instrument called partly paid-up shares. Softbank now has about 47% stake in the company, he added.
The reports of SoftBank’s investment first surfaced in October 2018, with speculations that the Japanese tech investor would lead a $200 Mn round in the company valuing it at around $800 Mn – $900 Mn.
Firstcry: Cornering The Baby Business
In 2010, Supam Maheshwari and Amitava Saha launched Firstcry to offer different categories of baby and kids products from clothing to school essentials etc from global brands like Funskool, Hotwheels, Nuby, Farlin, Medela, Pampers, Disney etc.
The company has expanded its parent base to over 4 Mn and a footprint of over 300 stores spread across 125 cities. It claims to offer 2 Lakh baby and kids products across 2,000 brands to 2 Mn customers.
Prior to this round, the startup has raised more than $100 Mn and is backed by investors such as IDG Ventures India, SAIF, Valiant Capital, Ratan Tata, Vertex Venture, and NEA. At the time of raising last funding in October’17, FirstCry also acquired BabyOye’s franchise business from Mahindra for $54 Mn.
The parent company reported a total income of $47.34 Mn (INR 337 Cr) in the fiscal year ending March 2018, a 47.5% jump against $32 Mn (INR 228.35 Cr) in FY17. The company’s total expenses for the year reached $57.4 Mn (INR 409.99 Cr), control of 35% from $88.75 Mn (INR 633 Cr) in the previous year.
The company’s losses also showed a larger control of 86% over its losses reaching $7.64 Mn (INR 54.5 Cr) from $55 Mn (INR 393 Cr) in the previous year.
With trends of Instagrammable baby pictures picking up helped by celebrity kids such as Taimur Ali Khan and AbRam Khan, kids fashion has become a much larger market in recent times.
According to a report by Technavio, the baby care market in India is expected to grow at an annual rate of over 17% in terms of revenue during the 2014- 2019 period to reach over $31 Bn, from $14 Bn.
SoftBank: Making Fortunes With Each Bet In India
Despite having troubles in the United States market for its links with the Saudi Arabian government over its Vision Fund, SoftBank continues to plan and sign larger paychecks for Indian startups.
SoftBank has already invested more than $7 Bn in the Indian startup ecosystem. In 2018, the Japanese conglomerate realised a gain of $1.3 Bn (¥ 146.7 Bn) from the sale of its shares in Flipkart, as part of $16 Bn Flipkart-Walmart acquisition deal.
In 2018, SoftBank made two unicorns in India with $238 Mn investment in PolicyBazaar and $1 Bn investment in hotel aggregator OYO. It is also said to be in talks to acquire a 37.87% stake in Delhivery Pvt Ltd and has sought nod of Competition Commission of India for the investment. It is also exploring investments in Paytm Mall, Zomato and Swiggy with several other bets still in works.