In a significant move towards its anticipated Initial Public Offering (IPO), SoftBank-backed FirstCry has disclosed its plans to raise INR 363 Cr through a pre-IPO private placement. The online omnichannel retail startup recently filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI), outlining its intention to generate a total of INR 1,816 Cr via fresh issues of shares.
The pre-IPO placement, a critical step in building investor confidence, is set to provide a valuation base for the IPO and will contribute to the net proceeds of the public offering. In addition to the pre-IPO move, FirstCry’s IPO will include an offer-for-sale (OFS) component, enabling existing shareholders to sell up to 5.43 Cr equity shares.
The startup has earmarked the net proceeds from the IPO for various strategic purposes, including setting up new modern stores and warehouses, overseas expansion in Saudi Arabia, investments in subsidiaries, and funding sales and marketing initiatives.
Use of IPO Proceeds:
- INR 648 Cr – Expenditure for setting up new modern stores and warehouses, and lease payments for existing modern stores in India.
- INR 155.6 Cr – Investment in the subsidiary FirstCry Trading for overseas expansion through new modern stores in Saudi Arabia.
- INR 170.5 Cr – Investment in subsidiary Globalbees Brands for acquiring an additional stake in indirect subsidiaries.
- INR 100 Cr – Investment in sales and marketing initiatives.
- INR 57.6 Cr – Technology and data science costs.
- Remaining funds for inorganic growth, acquisitions, strategic initiatives, and general corporate purposes.
The move aligns with recent trends in the startup ecosystem, with companies like Awfis and Ola Electric also exploring pre-IPO placements to bolster their financial positions ahead of IPO filings.
In the first quarter of FY24, FirstCry’s parent entity, Brainbees Solutions Limited, reported consolidated sales of INR 1,406.9 Cr. However, the startup incurred a net loss of INR 110.4 Cr during the same period, attributing INR 904.4 Cr to material procurement and INR 164.5 Cr to advertising expenses.
Headquartered in Pune, FirstCry has garnered substantial support from investors, including SoftBank, Chrys Capital, and Vertex Ventures, raising over $700 Mn in multiple funding rounds.
