Firstcry's IPO In Peril As Baby Product Giant's $500 Million IPO Stumbles Over Regulatory Hurdles

Firstcry, the Indian baby product e-commerce platform, is planning to withdraw its $500 million IPO following regulatory concerns over disclosed metrics

Firstcry, the Indian e-commerce platform specialising in baby products, is reportedly planning to withdraw its papers for an initial public offering (IPO) worth up to $500 million. 

This move is on the cards as early as next week, after the market watchdog raised concerns about the key figures it disclosed to investors.

BrainBees, the parent company of Firstcry, submitted its DRHP documents to SEBI in December last year. As per the filing, the company was set to be the country's largest IPO in 2024. It was planning to raise around $215 million through the issuance of new shares, alongside raising nearly $300 million by selling existing shares, according to a report by Reuters.

The e-commerce platform is backed by SoftBank, TPG, and Mahindra and Mahindra, and sells baby products like clothes, diapers, and toys. The company targets a niche segment of new parents in the world's most populous market.

However, the market watchdog notified the company that it hadn't followed Indian compliances, which state that a company preparing for an IPO must disclose all important business metrics shared with potential investors over the past three years, sources cited in the report said.

After facing widespread criticism for lax oversight over big loss-incurring firms boasting lofty valuations, the market watchdog introduced this rule in 2022 to heighten scrutiny of companies planning to go public.

While the company is set to refile its DRHP papers in the upcoming months, this will result in a massive delay in the sale of shares by existing investors.  

It is worth noting that the new-age firm continues to be a loss-making firm. As per the last disclosed figures, Firstcry's losses skyrocketed sixfold to $57.6 million, however, its total income more than doubled to $684 million.

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