FirstCry set to withdraw IPO papers after Sebi scrutiny: Report

FirstCry is set to withdraw its documents for an initial public offering (IPO) worth up to $500 million as soon as next week after facing scrutiny from the market regulator Securities and Exchange Board of India (Sebi).

Sebi has raised questions related to key metrics the baby and kids products retailer disclosed to investors, reported news agency Reuters quoting three sources familiar with the matter.

BrainBees, the parent company of FirstCry, had filed draft IPO papers with Sebi in December. It would have been one of the country’s biggest this year.

The company had filed to raise about $215 million via a fresh issue of shares, but plans to raise $300 million more via sale of existing shares, added the sources.

But in recent weeks, Sebi told the company that it had not complied with Indian regulations that mandate an IPO-bound company to share all key business m

FirstCry and Sebi have not yet issued any official comment.

Sebi implemented this regulation in 2022, intensifying scrutiny on companies seeking to go public.

This move followed widespread criticism regarding perceived leniency in oversight concerning large loss-making companies that had received high valuations.

FirstCry's Key Performance Indicators (KPIs) include metrics such as average order value, annual transacting customers, and the number of orders, as per the IPO papers.

The company will retract its IPO papers, implement revisions, and resubmit them in the forthcoming months, sources told the news agency. This postponement would impact the divestment of shares by investors, some of whom have held their investments for up to a decade.

Based on its draft papers, for the fiscal year ending March 31, 2023, FirstCry witnessed a sixfold increase in losses, amounting to $57.6 million.

However, its total income more than doubled, reaching $684 million during the same period.