FirstCry set to withdraw $500 million IPO papers after regulatory scrutiny, says Report

Indian retailer FirstCry, known for selling baby products such as clothes, diapers, and toys, is set to withdraw its application for a $500 million IPO, Reuters reported. 

The decision comes after the Securities and Exchange Board of India (SEBI) raised concerns about the key metrics disclosed to investors in its filing.

FirstCry, which is backed by major investors including SoftBank, TPG, and India's Mahindra and Mahindra, had initially filed papers with SEBI last December.

Details of the IPO and SEBI's concerns

FirstCry's IPO plan included raising approximately $215 million through fresh shares and an additional $300 million via a sale of existing shares.

However, SEBI's scrutiny has centred on the company's compliance with a 2022 regulation requiring that all key business metrics shared with prospective investors over the last three years be disclosed in the IPO papers.

The metrics under question include FirstCry's average order value, annual transacting customers, and the number of orders.

Financial performance and market impact

For the fiscal year ending March 31, 2023, FirstCry's revenue more than doubled to approximately $684 million, but its losses also saw a significant increase, jumping six times to $57.6 million.

The company had planned to use the IPO to bolster its growth but now faces a delay in selling shares to its investors, some of whom have been involved for over a decade.

Planned actions and future steps

The report said that FirstCry would withdraw its IPO papers, make the necessary revisions to address the regulatory concerns and aim to refile in the coming months. The adjustment period will include updating the financials with the latest data from three-quarters of FY24 (March 2023 to December 2023), the report said.