FirstCry, an omnichannel retailer, is in talks with a number of sovereign funds to help some of its shareholders sell shares at a price of about $3 billion, according to three people with knowledge of the matter who spoke to ET. According to those in the know, this got started when negotiations with the private equity firm Kedaara Capital collapsed a few months ago. The money is being planned as a pre-IPO round for the Pune-based business, they added, though conversations are still in their early stages.
Those familiar with the situation say that if the purchase goes through, Masayoshi Son-led SoftBank, the company that holds the largest stake in the omnichannel retailer of mother and baby products, will likely sell some of its 29% stake.
Norms of local ownership
These persons, who wished to remain anonymous since the negotiations are private, predicted that a formal secondary share sale worth about $100 million will take place.
The transaction hasn’t been finalized despite months of continued negotiations. This secondary share sale may attract Middle Eastern sovereigns and possibly pension funds, the source said. As negotiations progress, “deal contours can change.”
The corporation must abide by the nation’s foreign investment laws and limit foreign ownership to less than 51% because it is a multi-brand shop. FirstCry is an Indian-owned and -controlled corporation, with domestic funds owning the bulk of the company’s shares, much as the Nykaa beauty retail platform does.
In addition to SoftBank, its other major investors include TPG (6–7%), Mahindra Retail (12–13%), and Premji Invest (9–11%).
After receiving funding from Premji Invest once more, the company’s valuation was $2.7 billion. This investment was made after a loan from the National Investment and Infrastructure Fund failed to materialise despite the contract receiving approval from India’s antitrust watchdog, the Competition Commission.
Because FirstCry has been in protracted negotiations to reduce its foreign holding before going public, it bolstered cash from Premji Invest. When the markets became unsteady, the company postponed its plans to file its initial IPO documents last year.
One of the few profitable Indian companies that started out online is FirstCry. People with knowledge of the numbers say it is anticipated to report a profit, excluding costs related to employee stock ownership programmes, even though its audited results for the financial year ended March 31, 2022, have not yet been submitted to the ministry of corporate affairs.
As opposed to a loss of Rs 191 crore the year before, FirstCry declared a net profit of Rs 216 crore for the fiscal year 2021. In FY21, revenue increased from Rs 814 crore to Rs 1,603 crore.
The business also operates over 650 physical locations. Additionally, it owns Globalbees, an e-commerce platform with a $1.1 billion market cap. With a collection of 55 brands, Globalbees has acquired over 26 businesses.
Amitava Saha is the CEO of Xpressbees, a third-party logistics company that was recently spun off from FirstCry parent Brainbees Solutions. Brainbees Solutions was established in 2010 by Supam Maheshwari, Saha, Prashant Jadhav, and Sanket Hattimattur.