Brainbees Solutions, parent of FirstCry, has set the price band for its forthcoming initial public offer in the range of ₹440-465 a share, at a considerably lower valuation compared to a couple of years ago.
Investment bankers as well as founder Supam Maheshwari said the reduced valuation was not much of a concern and it had been arrived at after roadshows with institutional investors, based on their estimate of investor appetite.
In 2022, the company, which sells baby and children’s products, was valued at around $3.5 billion, while the pricing now values it at around $2.9 billion.
The size of the fresh issue has also been scaled down to ₹1,666 crore from ₹1,816 crore earlier. Maheshwari explained that the reduced size reflected the lower need for capital. Investment bankers said a decision was taken to raise a lower amount that would be spent over a shorter span. The company has the option to raise funds later, if required.
Draft prospectus
The company had initially filed its draft prospectus in December last year, but had to refile following demand for more disclosures by SEBI on its key performance indicators and financials. Incidentally, this marked the beginning for more scrutiny of draft prospectuses and enhanced disclosures by companies tapping the public markets.
Except for Schroders Capital, which is making an exit in the IPO, all other investors including Softbank are selling small stakes in the offer for sale (OFS) portion. The OFS component is 5.44 crore shares.
Softbank, which holds 25.2 per cent in FirstCry, will have a post-sale stake of around 20 per cent. Based on the number of shares on offer by the Japanese investment firm and its average cost of acquisition of shares of Brainbees, it stands to make a profit of ₹580-630 crore. Its current stake is worth around ₹5,766 crore at the upper end of the price band.
The other big investor is Mahindra & Mahindra, which is selling a little over 28 lakh shares from its holding of over 5.3 crore shares, that translates into a stake of 10.97 per cent.
The company narrowed its loss in FY24 to ₹274 crore, from ₹441 crore in FY23 and ₹719-crore loss in FY22. Maheshwari did not give a timeline as to when the company would break even, but said that its road to profitability was inevitable.
The issue opens on August 6 and closes on August 8.
