Brainbees Solutions, the parent company of online e-commerce unicorn FirstCry, which on Thursday filed its application for an initial public offering (IPO) with the Securities and Exchange Board of India (Sebi), will see Ratan Tata selling all his 77,900 shares in the company.
While the size of the IPO is not known, it includes a fresh issue of shares worth up to Rs 1,816 crore. The offer for sale (OFS) part includes offloading of up to 54.4 million shares by existing investors such as SoftBank, Mahindra & Mahindra, and private equity fund TPG.
Other selling shareholders include, PI Opportunities Fund, NewQuest Asia, Apricot Investments, Valiant Mauritius Partners, TIMF Holdings, Think India Opportunities Master Fund and Schroders Capital Private Equity Asia.
SoftBank is the biggest shareholder and holds a 25.6% stake or 124 million shares followed by Mahindra & Mahindra, which has 10.98% stake. There have been reports that SoftBank had sold shares worth $310 million in FirstCry ahead of the IPO, valuing the company in the range of $3.5-3.75 billion.
Among individual selling shareholders, FirstCry’s chief executive officer Supam Maheshwari owns 5.95% of the company while Ratan Tata holds 0.02% in preference shares.
Tata had bought 77,900 preference shares at a price of Rs 84.72 a share, amounting to an investment of around Rs 66 lakh. Maheshwari, on the other hand is selling 1.8 million shares out of the total 28.9 million shares he holds.
The company plans to use the proceeds to set up new modern stores and warehouses in India and Saudi Arabia, make lease payments for existing stores, to acquire additional stake in indirect subsidiaries under GlobalBees Brands, towards marketing and tech costs as well as inorganic growth.
FirstCry may consider a private placement of equity shares to certain investors for up to Rs 363 crore, the company said in the filing. If the pre-IPO placement is completed, the amount raised will be reduced from the fresh issue and will not exceed 20% of the total size of the fresh issue.
The company has in-house brands such as BabyHug, CuteWalk, Pine Kids, and Babyoye. Its omni-channel strategy consists of 80 warehouses and stockists across 47 cities in India, with a total capacity of 3.07 million sq ft, supporting 936 modern stores. Among them, 615 stores are franchise-owned and 321 are company-owned and operated.
It plans to use Rs 357.2 crore from the net proceeds towards capex for fit-outs, inventory costs and security deposits to set up 483 stores in India by FY27.
Founded in 2010 by Maheshwari and Amitava Saha, the firm initially started as an online baby care brand but soon switched to an omnichannel strategy, much like most direct-to-consumer players. Despite consistent growth in revenue, FirstCry’s losses continued to pile up over the years. In the last decade, the company only managed to briefly turn profitable in FY21, generating a profit of Rs 216 crore.
The company’s FY23 financials show that it recorded a six-fold jump in its losses to Rs 486 crore during the year, as expenses soared higher despite a 2x jump in its sales. The company posted a revenue from operations of Rs 5,632 crore during FY23, which is more than double compared to the Rs 2,401 crore it had in the preceding year.
Its expenses for the year jumped 146% to Rs 6,316 crore from Rs 2,568 crore in FY22, as nearly every cost item increased significantly for the company during the year.
