Ranjan Pai, the chairman of the Manipal Group is currently engaged in negotiations to acquire a stake, in FirstCry, an e-commerce platform that focuses on children’s products. It has been reported that Pai intends to invest $30 million as part of a secondary share sale valued at $60 million which would result in FirstCry being valued at $3 billion. Furthermore, SoftBank, one of the shareholders of FirstCry is considering reducing its stake, in the company.
Ranjan Pai, the chairman of Manipal Group, is in advanced discussions to acquire a stake in FirstCry, a prominent children-focused e-commerce company on the brink of an IPO. This strategic move involves Pai’s potential investment of around INR 250 Crore (approximately $30 million) as part of a $60 million secondary share offering at a valuation of roughly $3 billion, as per sources.
Joining forces with other investors, Pai is expected to participate in the secondary share sale, which is on track for completion in the near future. Notably, this transaction occurs exclusively between incoming and outgoing investors, without any funds being directed to FirstCry directly.
This marks Pai’s third significant investment in Indian startups recently. His previous commitment involved an $80 million investment in the test preparation arm of edtech giant BYJU’S, named Aakash. Although Pai had previously invested in BYJU’S through Aarin Capital, the fund divested its holdings in the edtech company some years ago.
Pai’s ventures extend further as he considers a stake acquisition in PharmEasy during its upcoming rights issue, alongside Aakash and FirstCry. The move aligns with FirstCry’s aim to enhance local investor participation and reduce foreign shareholding, crucial due to India’s foreign direct investment (FDI) regulations, which mandate maintaining foreign shareholding below 51% for e-commerce entities.
Firstcry’s intentions to go public in 2024 have been affected by market instability in 2022, leading to the postponement of its plans to file draft papers for a potential public offering of up to $1 billion.
It’s noteworthy that SoftBank, holding a substantial 29% stake, is the largest shareholder in FirstCry. To avoid classification as a promoter of the parent company Brainbees Solutions, SoftBank seeks to dilute its stake to under 26%. Other significant stakeholders include Premji Invest (9-11% stake), Mahindra Retail (12-13% stake), and TPG (6-7% stake).
In terms of financial performance, FirstCry faced a setback in FY22, recording a net loss of INR 78.7 Crore following a net profit of INR 215.9 Crore in FY21. Despite the loss, the company achieved a remarkable 50% increase in sales revenue, rising from INR 1,602.8 Crore in FY21 to INR 2,401.3 Crore.
Notably, FirstCry is among SoftBank’s portfolio firms in India slated for a potential public listing in the upcoming year, alongside Swiggy, Lenskart, and OfBusiness. According to Navneet Govil, Executive Managing Partner and CFO of SoftBank Vision Fund, FirstCry is anticipated to submit its IPO draft papers before the conclusion of 2023.
