FirstCry withdraws $500 million IPO papers amid regulatory scrutiny

FirstCry IPO: FirstCry, India's prominent retailer specialising in baby products, is poised to withdraw its Initial Public Offering (IPO) papers amounting to $500 million as early as next week. This decision comes in response to heightened scrutiny from Securities and Exchange Board of India (SEBI), which has raised concerns regarding crucial metrics disclosed to potential investors, news agency Reuters reported, quoting three sources directly familiar with matter.

Backed by major investors such as SoftBank, TPG, and India's Mahindra and Mahindra, FirstCry has established itself as a key player in baby products market, offering a wide range of items including clothing, diapers, and toys, catering to needs of new parents in country.

FirstCry's parent company, BrainBees, submitted papers to India's Securities and Exchange Board last December, outlining plans for one of largest IPOs in country this year. While company aimed to raise approximately $215 million through fresh shares, an ditional $300 million was anticipated from sale of existing shares, as per report.

However, recent communication from SEBI to company revealed non-compliance with Indian regulations mandating inclusion of all key business metrics shared with potential investors over past three years in IPO documentation. Notably, SEBI implemented this requirement in 2022 to enhance scrutiny of companies seeking listing, particularly in response to concerns about valuation of large loss-making entities.

Among key performance indicators (KPIs) highlighted in FirstCry's papers are its average order value, annual transacting customers, and number of orders processed, providing insight into company's operational performance.

FirstCry is now expected to retract its IPO papers, effect necessary revisions, and resubmit m as early as forthcoming week, report ded.

According to draft papers, for fiscal year ending March 31, 2023, FirstCry witnessed a significant surge in losses, which escalated six-fold to $57.6 million. In contrast, its total income more than doubled, reaching $684 million during same period, underscoring complexities of its financial performance.

(With Reuters inputs.)