FirstCry IPO set to open on August 6: Key details from the Red Herring Prospectus

The initial public offering (IPO) of Brainbees Solutions, the parent company of FirstCry, is scheduled to open for subscription from August 6 to 8, 2024. The IPO is a book-built issue, which includes a fresh issue worth ₹1,666 crore and an offer for sale (OFS) of up to 5.4 crore shares by existing shareholders, including Mahindra & Mahindra (M&M) and SoftBank.

IPO Schedule:

The IPO will open for subscription from August 6 to August 8, 2024.

The anchor investor round will commence on August 4, with the official launch of the IPO on August 5.

The price band for the IPO will be disclosed later in the week.

IPO Structure:

The IPO consists of a fresh issue of ₹1,666 crore and an offer for sale (OFS) of up to 5.44 crore shares.

The book-running lead managers for the IPO are Kotak Mahindra Capital Company Limited, Morgan Stanley India, Bofa Securities India, JM Financial, and Avendus Capital.

Link Intime India Private Ltd has been appointed as the registrar for the IPO.

Offer for Sale (OFS) Details:

Mahindra & Mahindra plans to offer up to 28.06 lakh shares in the OFS.

SVF Frog, managed by SoftBank, will sell 20,318,050 shares.

Other participants in the OFS include PI Opportunities Fund, TPG Growth, NewQuest Asia, Apricot Investments, Satyadharma Investments, Schroders Capital, Sage Investment, and Pratithi Investment.

Notably, Ratan Tata, who acquired a 0.02% stake in FirstCry for ₹66 lakh, plans to sell all 77,900 of his shares in the IPO.

Financial Performance:

In FY24, FirstCry recorded a 15% increase in operating revenue, reaching ₹6,481 crore.

The company also reduced its losses by 34% to ₹321 crore during the same period.

Over the past three financial years, the company's revenue has grown significantly, from ₹2,401 crore in FY22 to ₹6,481 crore in FY24, making it the largest multi-channel retail platform for mothers, babies, and kids in terms of gross merchandise value (GMV) for FY24.

Risk Factors:

The company has experienced negative net cash flows in the past and may continue to do so in the future.

FirstCry will not receive any proceeds from the OFS portion, as the proceeds will go to the selling shareholders.

Between 2017 and 2020, the Indian retail market grew at a compound annual growth rate (CAGR) of 12%, reaching ₹62-64 trillion by the end of FY20. This growth was driven by increased consumption and income, the expansion of emerging and established income households, and rising demand from tier 2 and smaller cities, all supported by a strong logistics infrastructure.