FirstCry, known for its baby products, is reportedly withdrawing its $500 million IPO application due to regulatory scrutiny by SEBI

Key Points

  • Indian retailer FirstCry, known for its baby products, is reportedly withdrawing its $500 million IPO application due to regulatory scrutiny by SEBI.
  • SEBI raised concerns about key metrics disclosed to investors, including average order value, annual transacting customers, and the number of orders.
  • FirstCry’s IPO plan involved raising $215 million through fresh shares and $300 million via the sale of existing shares.
  • Despite revenue doubling to $684 million for the fiscal year ending March 31, 2023, FirstCry’s losses also surged sixfold to $57.6 million.

Indian retailer FirstCry, renowned for its array of baby products like clothes, diapers, and toys, is reportedly withdrawing its application for a $500 million IPO due to regulatory scrutiny. The decision follows concerns raised by the Securities and Exchange Board of India (SEBI) regarding key metrics disclosed to investors in its filing.

Backed by major investors including SoftBank, TPG, and India’s Mahindra and Mahindra, FirstCry had initially filed papers with SEBI last December. The IPO plan involved raising approximately $215 million through fresh shares and an additional $300 million via the sale of existing shares. However, SEBI’s scrutiny focused on the company’s compliance with a 2022 regulation mandating disclosure of all key business metrics shared with prospective investors over the past three years.

Metrics such as FirstCry’s average order value, annual transacting customers, and the number of orders were under scrutiny. Despite a significant increase in revenue to approximately $684 million for the fiscal year ending March 31, 2023, FirstCry’s losses also surged, reaching $57.6 million—a sixfold jump.

The IPO was intended to fuel FirstCry’s growth, but the withdrawal means a delay in selling shares to investors, some of whom have been engaged with the company for over a decade. FirstCry plans to withdraw its IPO papers, address regulatory concerns, and refile in the coming months. This process will involve updating financials with the latest data from three-quarters of FY24 (March 2023 to December 2023).