Indian family offices have invested INR 435 crore, in the renowned e-commerce giant FirstCry, which focuses on children’s products. This investment allowed them to acquire SoftBank’s stake in the company. As per the regulations governing investment (FDI) SoftBank has reduced its stake by 1.5 2% through a secondary share sale. FirstCry has plans for growth with an aim to go public and expand its presence by opening 1,000 stores. They also project a revenue of over INR 5,000 crore, for FY23.
Three Indian family offices have acquired a stake in the prominent children-focused e-commerce giant, FirstCry, for approximately INR 435 Crores. The stake was primarily purchased from SoftBank, the unicorn’s largest investor. The family offices involved in this strategic move are the MEMG Family Office led by Ranjan Pai of Manipal Group, Sharrp Ventures representing Harsh Mariwala’s investment office from Marico, and Hemendra Kothari’s DSP family office.
This secondary share transaction will lead to a reduction of SoftBank’s stake by approximately 1.5-2%. Currently, SoftBank holds a 29% share in the e-commerce unicorn. Among other notable investors in FirstCry are Premji Invest, owning approximately 9-11% of the stake, Mahindra Retail with a 12-13% holding, and TPG holding a stake of 6-7%.
This investment from Indian family offices aligns with FirstCry’s goal of reducing foreign shareholding before its anticipated initial public offering (IPO). This step is necessary to comply with India’s FDI laws for e-commerce, which require foreign shareholding to remain below 51%.
Supam Maheshwari, CEO of FirstCry, expressed his satisfaction with the new investors joining the venture, acknowledging their successful track records in scaling businesses in India.
The timing of this secondary share sale coincides with an increasing trend of family offices engaging in startup investments. India currently hosts over 300 family offices, with projections indicating a significant rise in this number. Furthermore, estimates suggest that the count of family offices actively participating in startup investments annually will multiply from 123 in 2023 to 735 by 2030.
SoftBank’s move to dilute its stake is aimed at maintaining its total shareholding below 26% to avoid classification as a promoter. FirstCry initially planned to file draft papers for a $1 billion public issue in the previous year, but market volatility in 2022 led to a postponement. The e-commerce unicorn now aims to submit its draft IPO papers by the end of 2023.
In addition to its financial developments, FirstCry is enhancing its omnichannel operations. With a current count of 900 physical stores, the company plans to expand to 1,000 stores in the near term and eventually reach 3,000 stores in the coming years.
In the fiscal year 2022, FirstCry reported a loss of INR 78.7 Crores, though its operating revenue surged by 50% from INR 1,602.8 Crores in FY21 to INR 2,401.3 Crores in FY22. In FY21, the company posted a profit of INR 215.9 Crores. For FY23, including all subsidiaries, firstcry’s consolidated revenue is projected to exceed INR 5,000 Crores, reflecting a growth of around 45% from FY22.
Among players in the e-commerce domain, Mamaearth, Snapdeal, and boAt have all secured approval from SEBI for their respective public listings. However, Snapdeal and boAt have made adjustments to their IPO plans due to market volatility, with Snapdeal postponing and boAt raising INR 500 Crores.
