FirstCry in talks to raise up to $200 million at nearly $2 billion valuationMumbai: TPG Growth, Premji Invest and ChrysCapital are in advanced negotiations to acquire stakes in SoftBank-backed FirstCry as the retailer of baby products looks to raise $150-180 million at a valuation of $1.8-2.1 billion, said people aware of the matter.

The secondary share of sales will allow some early-stage backers of the 11-year-old company to exit, they said. ET was the first to report the company’s plans on January 8.

The transaction would double the company’s valuation in less than 24 months. SoftBank Vision Fund had picked up a 40% stake in the company in 2019, valuing it at about $1.1 billion. FirstCry received $400 million in fresh equity from the Masayoshi Son-led fund as part of a Series E funding round.

The final quantum or number of new investors is expected to get finalised soon, as is the stake dilution which is expected to be less than 10%. According to the people cited above, the company aims to go public in 24-36 months and wants to realign its capitalisation table before that.

Firstcry CEO Supam Maheshwari and spokespersons for ChrysCap and Premji Invest didn’t respond to queries. TPG Growth declined to comment.

“Some of the company’s early backers might be looking to sell their stake, fully or partially,” said another person with knowledge of the development. Investment bank Avendus Capital has been mandated to look for investors.

FirstCry has raised a total of $503 million in seven funding rounds since 2011 from investors such as Chiratae Ventures, NEA, Vertex Partners and Elevation Capital, Valiant Capital, Ratan Tata, Krish Gopalakrishnan and Softbank, according to Venture Intelligence data.

Started in September 2010, the company is a leader in the omnichannel baby and mother care products segment. It acquired BabyOye from Mahindra Retail in an all-stock deal worth Rs 362 crore in 2016.

In the same year, co-founders Maheshwari and Amitava Saha spun off their logistics division, XpressBees, into a separate company. They subsequently raised capital from Jack Ma-owned Alibaba Group. XpressBees raised $110 million in Series E funding from private equity firms Investcorp, Norwest Venture Partners and Gaja Capital in November.

Vertical, or specialist, e-commerce companies have done better than horizontal, tech-led e-commerce firms and are likely to make money and profits faster, said Kashyap Chanchani, managing partner at The Rainmaker Group, a domestic investment bank.

“There is considerable investor interest for such consumer brands as the liquidity event (IPO) is closer and there is a promise of predictable outcome in terms of P&L and growth rates,” he said. “We will see a lot of capital flow into this sector over the next 24-36 months.”

With more than 300 stores in 125 cities, FirstCry has expanded its user base to over 4 million and says it offers 200,000 baby and kids products from 2,000 brands. It competes with Hopscotch and Kids Stop Press in the online segment.

In FY20, the Pune-based company’s revenue rose 68% to Rs 897 crore, helping it to it cut net losses by 83% to Rs 191 crore. Expenses dropped 26% to Rs 1,088 crore, company filings show. However, most e-commerce operations had to significantly scale down operations in the April-June period due to the pandemic.

As per Statista, the India’s apparel market is expected to grow at 11% to $85 billion by 2021. The kidswear segment accounted for about 20% of that in 2018 and is predicted to reach nearly Rs 1.7 lakh crore by 2028.

All the three investors mentioned above have deep consumer and retail investment experience having backed ventures as diverse as Nykaa, BookMyShow, W, Dream 11, Lenskart, CavinKare, Myntra and Future Lifestyle Fashions among others.





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