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 the 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 the matter.

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

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

However, recent communication from SEBI to the company revealed non-compliance with Indian regulations mandating the inclusion of all key business metrics shared with potential investors over the 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 the valuation of large loss-making entities.

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

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

According to draft papers, for the 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 the same period, underscoring the complexities of its financial performance.

(With Reuters inputs.)