The Economic Times daily newspaper is available online now.

    FirstCry plans $1 billion IPO, may seek Sebi nod next month

    Synopsis

    FirstCry turned profitable in fiscal year 2021, as per recent regulatory filings, clocking a net profit of nearly Rs 216 crore compared with a loss of Rs 191 crore in the previous year. FirstCry reported operational revenue of Rs 1,603 crore in FY21, compared with Rs 814 crore the year before.

    Firstcry_IPO_THUMB IMAGE_ETTECH_1
    Bengaluru: Even as some of the top-tier startups are delaying their initial public offering (IPO) plans amid a wider economic uncertainty, ecommerce firm FirstCry is going ahead with its $1 billion IPO and will file its draft papers next month, people briefed on the matter

    Initially, the Pune-based etailer, backed by SoftBank and Premji Invest, was considering a $600-700 million IPO, but has now decided to increase the offer size to as much as $1 billion. The company feels the market sentiment will be better and there will be enough appetite for good companies among public market investors by the time it can list here in the second half of the year, the people said.

    Elevate Your Tech Prowess with High-Value Skill Courses

    Offering CollegeCourseWebsite
    IIM KozhikodeIIMK Advanced Data Science For ManagersVisit
    IIT DelhiIITD Certificate Programme in Data Science & Machine LearningVisit
    MITMIT Technology Leadership and InnovationVisit
    The ecommerce firm that sells baby-care products is likely to offer fresh shares as well as shares held by some of the existing investors in the IPO, with the latter being around 75% of the total issue size, the people added. This means the primary share sale in FirstCry IPO would be around $250 million. Proceeds from the sale of shares by existing investors won’t go to the company.

    As it gears up to file draft papers with market regulator Securities and Exchange Board of India (Sebi), the company has also finalised the board approvals to convert itself into a public limited company from being a private limited company. This is a formal process required to be followed before seeking Sebi nod.

    “They (FirstCry) have now finalised plans to make this a $1 billion issue size. The board approval is also in place where FirstCry parent Brainbees Solution has been converted to a public Ltd firm,” a person aware of the matter said.

    Valuation and profit

    FirstCry turned profitable in fiscal year 2021, as per recent regulatory filings, clocking a net profit of nearly Rs 216 crore compared with a loss of Rs 191 crore in the previous year. FirstCry reported operational revenue of Rs 1,603 crore in FY21, compared with Rs 814 crore the year before.

    FirstCry FinancialsETtech

    Started in 2010, Supam Maheshwari-led FirstCry may seek a valuation of close to $7 billion for its debut on Dalal Street, people aware of the matter said.

    “The company being profitable will lead to FirstCry being able to seek a premium on valuation amid broader correction in late-stage, new-age companies. According to internal estimates, it plans to report an increased profit in the fiscal year of 2022,” this person said. The most updated financials of the company will reflect in its draft red herring prospectus (DRHP).

    When contacted, FirstCry’s Maheshwari declined to comment on the IPO plans.

    ET reported on April 1 that FirstCry’s $240 million secondary funding deal with Indian sovereign wealth fund National Investment and Infrastructure Fund had fallen through. Existing investor Premji Invest was likely to step in and buy more in the company, the paper had reported.

    Prior to the deal falling through, FirstCry had conducted a $315-million secondary share sale in March last year. SoftBank is its largest investor with an over 30% stake in the omni-channel etailer. It was last valued around $2.3-2.5 billion. It has around 600 stores in India and also has a presence in the UAE.

    Other startup IPOs delayed

    FirstCry’s DRHP filing next month will be coming at a time when startups like Delhivery and PharmEasy have had to postpone their listing plans due to volatility in markets, especially in new-age stocks like Zomato, Nykaa and Paytm. Both Delhivery and PharmEasy had secured Sebi’s nod and were initially planning to get listed in the last financial year ended March 31.

    “We want to go public when our company is well understood. While valuation is one of the factors (for the delay), it is not a critical factor – since we do not require the capital, and market conditions currently are bumpy,” Sahil Barua, cofounder and chief executive at Delhivery, said at the Economic Times Startup Awards 2021 last month. Delhivery had filed its DRHP with Sebi for a $970 million IPO in November last year.

    PharmEasy too is being cautious and trying to understand the pulse of the market in terms of demand for its stock. These startups are also tracking the much-hyped LIC IPO which is now expected to come next month after it got delayed due to market volatility amid the Ukraine-Russia war. ET reported on April 24 that LIC’s board had approved a 3.5% equity sale in the IPO for about $3 billion. Prior to markets turning choppy, it had plans for an issue size of over $8 billion.

    SoftBank-backed Oyo Hotels & Homes had also filed for a $1.2 billion IPO with Sebi last November, but it has yet to secure the regulator’s nod. ET has also reported that its issue size was likely to be below $1 billion, going forward. Following Paytm’s disastrous debut on the bourses, its smaller rival, Mobikwik, put its listing plans on hold amid increased scrutiny and apprehension over fintech models and their ability to generate profits.
    The Economic Times

    Stories you might be interested in