FirstCry to Withdraw $500 Million IPO Following SEBI Scrutiny

• ByStartupStory     |    April 27, 2024

FirstCry, the popular baby product retailer, is expected to retract its application for a $500 million Initial Public Offering (IPO) next week. This decision comes after the Securities and Exchange Board of India (SEBI) raised concerns over the disclosure of key business metrics, according to sources familiar with the matter.

FirstCry, which is supported by heavyweight investors such as SoftBank, TPG, and Mahindra and Mahindra, had filed for an IPO through its parent company, BrainBees, last December. The company aimed to raise approximately $215 million through fresh shares and an additional $300 million by selling existing shares. This IPO was poised to be one of the largest in India this year.

The regulatory hurdle arose when SEBI pointed out non-compliance with its 2022 mandate, which requires companies aiming to go public to disclose all key business metrics to investors, as they had in the past three years. “SEBI told the company it had not complied with Indian regulations that mandate an IPO-bound company must share all key business metrics that in its papers that it has shared with prospective investors in the last three years,” disclosed the sources.

The regulatory focus on thorough disclosure reflects SEBI’s heightened scrutiny of IPO-bound companies, particularly after criticism of its oversight on loss-making firms that have achieved high valuations in the past.

Key Performance Indicators for FirstCry, as mentioned in its draft papers, include average order value, annual transacting customers, and the number of orders. Despite these detailed metrics, the compliance issue has forced FirstCry to reconsider its IPO strategy.

“FirstCry will now withdraw its IPO papers, make changes and refile them as early as next week,” one of the sources revealed, suggesting a swift response to the regulatory feedback.

Financial figures from the company’s draft papers indicate that for the fiscal year ending March 31, 2023, FirstCry’s losses expanded sixfold to $57.6 million, while its total income more than doubled to $684 million, showcasing significant growth alongside rising losses.

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