Firstcry IPO in Troubles As They Face Regulatory Hurdles

It is reported that Indian retailer, First Cry is set to withdraw its papers for the upcoming $500 million IPO as early as next week after India’s markets regulator SEBI has raised questions over key metrics it disclosed to investors, FirstCry is  India’s leading company focused on baby products retailing. The company was started in 2010 and is headquartered in Pune.

FirstCry sells baby products including clothes, diapers and toys and is aiming to tap this market in the most populous country of the world.

What Has Been informed by SEBI to FirstCry?

SEBI has told the retail company that it has not complied with the Indian regulations that are mandatory for an IPO bound Company must share all key business metrics that it has shared with the prospective investors in the last three years. This new rule was introduced by the Indian Market Regulator, SEBI in 2022. According to reports, FirstCry may refile IPO papers soon with its latest financials.

DRHP of FirstCry

In its Draft Red Herring Prospectus, FirstCry had proposed funds through a combination of fresh issue of equity shares of around Rs.1800 crores and an Offer for Sale of up to 54,391,592 equity shares. SoftBank, Mahindra & Mahindra, Premji Invest, New Quest Asia, Apricot Investments, Valiant Partners, TIMF Holdings, Think India Opportunities, and Schroders Capital were set to divest their shares in the OFS.

Financials of FirstCry

For FY 2022-23, FirstCry’s revenue from operations more than doubled to Rs.5632 crores from Rs.2401 crores in FY 2021-22. While the net losses jumped six times and were reported at Rs.485 crores in FY 2022-23.

Conclusions

The withdrawal of FirstCry from IPO after regulators’ concern is likely to set an example for other late-stage startups which are yet to file initial papers. The regulators in India such as SEBI and RBI have now become ruthless when it comes to disclosures and compliances. With this, reports are saying that the Pune-based company may refile its soon with the latest financials including the first quarters of FY 2023-24.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.