Indian retailer FirstCry is reportedly pulling back its IPO filing, aiming to raise up to USD 500 million, as early as next week. This decision comes after India's securities regulator raised concerns regarding the disclosure of certain key metrics provided to investors, according to three sources familiar with the matter.
FirstCry, supported by investors like SoftBank, TPG and Mahindra and Mahindra in India, specialises in selling baby products such as clothing, diapers and toys, targeting new parents in India.
BrainBees, the parent company of FirstCry, submitted its IPO papers to India's Securities and Exchange Board last December. The proposed IPO, which initially aimed to raise around USD 215 million through fresh shares, planned to generate an additional USD 300 million through the sale of existing shares, as per the sources.
However, SEBI recently informed FirstCry that it failed to comply with Indian regulations mandating IPO-bound companies to disclose all significant business metrics shared with potential investors over the past three years. FirstCry's Key Performance Indicators (KPIs), including average order value, annual transacting customers and number of orders, were among the metrics highlighted in its filings. Both FirstCry and SEBI have not responded to requests for comments regarding this matter.
The introduction of this rule in 2022 has led to increased scrutiny of companies seeking to go public, following criticism of the perceived leniency in oversight over large loss-making firms with high valuations. FirstCry now plans to retract its IPO papers, revise them, and resubmit them in the coming months. This decision will postpone the share sale by its investors, some of whom have held investments for over a decade.
According to the draft papers, FirstCry's losses surged sixfold to USD 57.6 million for the fiscal year ending 31 March 2023, while its total income more than doubled to USD 684 million.
