FirstCry IPO closes today, lukewarm response so far

The initial public offering of FirstCry’s parent, Brainbees Solutions Ltd, will close today for public subscription. The issue has so far witnessed only a lukewarm response from investors. At the end of Day 2, the issue was subscribed to just 0.30 times or 30 per cent. The IPO has a price band of ₹440-465 and the lot size is 32 equity shares.

In the public offering, the Firstcry IPO has set aside 75 per cent for qualified institutional buyers (QIB), 15 per cent for non-institutional institutional investors (NII), and 10 per cent for retail investors. Up to ₹3 crore worth of shares are also reserved for employee reservation section, who would receive a discount of ₹44 per share.

Except for the staff and retail investors’ quotas, the other portions remained undersubscribed. While the QIB portion has not received any significant bids, the NII portion was subscribed to 0.30 times, the retail quota was subscribed to 1.06 times, and the employee portion, the most aggressive bidders, was subscribed to 3.44 times.

• Also read: FirstCry IPO: Should you place an order?

The ₹4,193-crore public issue of Pune-based Brainbees Solutions consists of a fresh issue worth ₹1,666 crore and an OFS (offer for sale) of up to 5.44 crore shares worth ₹2,528 crore by existing shareholders. Through the OFS, SVF Frog, a Cayman Islands-registered entity of Softbank, will sell 2.03 crore shares, and automaker Mahindra & Mahindra (M&M) will offload 28.06 lakh shares. Apart from Softbank and M&M, other sellers in the OFS include PI Opportunities Fund, TPG, NewQuest Asia Investments, Apricot Investments, and Schroders Capital. Additionally, individuals selling shareholders include veteran industrialist Ratan Tata.

Currently, Softbank holds a 25.55 per cent stake in Brainbees Solutions, and M&M owns a 10.98 per cent stake in the multi-brand retailing platform.

As part of the IPO, the online e-commerce platform raised ₹1,886 crore from anchor investors by allotting 4.05 crore shares to 71 funds at ₹465 apiece. The Government of Singapore, Nomura Funds, Abu Dhabi Investment Authority, Fidelity Funds, Goldman Sachs Funds, Citigroup Global Markets Mauritius, SBI Mutual Fund (MF), ICICI Prudential MF, HDFC MF, Kotak MF, and SBI Life Insurance Company are among the anchor investors.

Use of funds

The company will use the net proceeds from the fresh issue to set up new modern stores under the brand ‘BabyHug’, invest in subsidiaries, expand overseas, and implement sales and marketing initiatives. A portion will also be used for general corporate purposes.

Brokerage houses have pegged the company’s market capitalisation to ₹24,142 crore post-issue.

Launched in 2010, FirstCry is India’s largest multi-channel, multi-brand retailing platform for products for mothers, babies and kids. It was set up to create a one-stop destination for parenting needs across commerce, content, community engagement, and education based on brand affinity, loyalty, and trust of customers.

Further, FirstCry expanded internationally in select markets, establishing a presence in the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) in 2019 and 2022, respectively.

Kotak Mahindra Capital Company Ltd, Morgan Stanley India Company Private Ltd, BofA Securities India Ltd, JM Financial Ltd and Avendus Capital Private Ltd are the book-running lead managers to the issue.