Three Family Offices Secure FirstCry Stake Worth INR 435 Cr From SoftBank

Three Indian family offices have secured a stake in the children-focused ecommerce giant FirstCry for about INR 435 Cr. 

Manipal Group’s Ranjan Pai’s MEMG Family Office, Marico’s Harsh Mariwala’s investment office Sharrp Ventures and the DSP family office of Hemendra Kothari have picked up a stake in FirstCry by largely buying from the unicorn’s largest investor SoftBank, ET reported.

The secondary share sale will see SoftBank dilute its stake by about 1.5-2%, while the Japanese investment giant holds 29% of the ecommerce unicorn currently. Other major investors in FirstCry include Premji Invest, with about 9-11% stake, Mahindra Retail, which holds 12-13% and TPG with a 6-7% stake.

The investment from Indian family offices comes when FirstCry has been looking to dilute foreign shareholders ahead of its initial public offering (IPO). FirstCry has to keep its foreign shareholding below 51% in line with the country’s FDI laws for ecommerce.

“Our early investors have been instrumental in our success, and we are delighted to have helped deliver multi-fold returns to our investors. I welcome our new investors who bring with them an exceptional track record and knowledge of scaling large successful businesses in India, that will be highly valuable in our journey ahead,” FirstCry CEO Supam Maheshwari told ET.

The secondary share sale comes at a time when family offices are increasingly exploring startup investments. According to an Inc42 report, there are 300+ family offices in India, with the number set to increase significantly. 

Further, estimates show that the number of family offices actively taking part on an annual basis in startup investments will likely increase 5x to 735 by 2030 from 123 in 2023.

SoftBank has been the first to dilute its stake in a bid to bring its total shareholding to below 26% so that it does not get classified as a promoter.

FirstCry had finalised its plans to file its draft papers for a public issue of $1 Bn last year but put those plans in cold storage due to market volatility in 2022. The ecommerce unicorn is now aiming to file its draft IPO paper before the end of 2023.

The kids-focused ecommerce unicorn is also preparing a significant upgrade to its omnichannel operations. FirstCry is set to reach 1,000 physical stores soon from 900 presently, with a target to reach 3,000 stores in the next few years.

In FY22, the unicorn posted a loss of INR 78.7 Cr, even as operating revenue jumped 50% to INR 2,401.3 Cr from INR 1,602.8 Cr in FY21. In FY21, FirstCry posted a profit of INR 215.9 Cr. FirstCry, including all its subsidiaries, is estimated to have a consolidated revenue of over INR 5,000 Cr in FY23, growing by around 45% from FY22, according to the company.

In the ecommerce space, the likes of Mamaearth, Snapdeal and boAt have all received a nod from the sector regulator SEBI for their respective public listing. However, Snapdeal dropped its IPO plans citing market volatility, while boAt also raised INR 500 Cr and postponed IPO plans for the time being.