FirstCry's parent company Brainbees Solutions files for an IPO
Brainbees Solutions, the parent company of online e-commerce unicorn FirstCry, has filed for an initial public offering (IPO) with the Securities and Exchange Board of India (SEBI). The Pune-based firm aims to raise Rs. 1,816 crore through fresh issue, as stated in the Draft Red Herring Prospectus (DRHP). Existing investors, such as Mahindra & Mahindra (M&M), SoftBank, TPG, and NewQuest Asia, plan to sell a combined 5.44 crore shares in Brainbees through an Offer for Sale (OFS).
IPO details and valuation
It was earlier reported that FirstCry is looking to raise a total of $500 million (nearly Rs. 4,200 crore) through its IPO. Around 60% of the amount will be the OFS component while the remaining will be fresh issue. Share price details remain undisclosed as of now. The selling price of the shares will be determined by Brainbees in consultation with the Book Running Lead Managers once the IPO's price band is decided.
Use of funds and risks involved
Proceeds from the IPO will be used to open new stores and warehouses, as well as expand internationally. The company mentioned in its DRHP, "We cannot assure you that we will continue to grow our customer base at this rate or at all in the future." "Further, if we fail to acquire new customers, or fail to do so in a cost-effective manner, we may not be able to maintain or increase our revenues or grow our operations."
FirstCry's financial performance
FirstCry's consolidated net loss increased 515% from Rs. 79 crore in FY22 to Rs. 486 crore in FY23. However, its consolidated revenue grew by 135%, reaching Rs. 5,633 crore in FY23, up from Rs. 2,401 crore in FY22. FirstCry stands among the select e-commerce firms that surpassed the Rs. 5,000 crore revenue mark. Income from product sales accounted for 98% of the total operating revenue, while material procurement costs accounted for 62% of the overall expenses.
Stake sale by existing investors
M&M will sell a 0.58% stake or 28 lakh shares in Brainbees Solutions, while SoftBank will offload 2.03 crore shares. Other selling shareholders include PI Opportunities Fund, TPG, NewQuest Asia, Apricot Investments, Valiant Mauritius Partners, TIMF Holdings, Think India Opportunities Master Fund, and Schroders Capital Private Equity Asia. SoftBank is FirstCry's largest shareholder with a 25.5% stake, followed by M&M's 10.98% stake.
