FirstCry Poised to Withdraw IPO Papers Amid Sebi Scrutiny: Reports

FirstCry, the prominent baby and kids products retailer, is teetering on the edge of retracting its documents for a highly anticipated initial public offering (IPO) valued at a staggering $500 million. This decision comes in the wake of a thorough examination by India's market regulator, the Securities and Exchange Board of India (Sebi), underscoring the gravity of the situation.

BrainBees, the parent entity of FirstCry, had submitted draft IPO papers to Sebi in December, positioning it as one of the most significant IPOs in the country this year. The proposed offering aimed to raise approximately $215 million through a fresh issue of shares, supplemented by an additional $300 million from the sale of existing shares.

However, the situation took a turn when Sebi, in recent interactions, expressed concerns over FirstCry's disclosure of crucial business metrics to potential investors. This development has cast a shadow over the IPO process.

Sebi's intensified scrutiny is a direct result of the regulatory changes implemented in 2022, which aim to strengthen oversight of companies seeking to enter the public markets. This shift was prompted by widespread concerns about the perceived leniency in monitoring large loss-making entities with high valuations, providing a crucial context for the audience.

FirstCry's Key Performance Indicators (KPIs), including average order value, annual transacting customers, and order volume, were among the metrics subject to scrutiny as disclosed in the IPO papers.

While no official statements have been made by either FirstCry or Sebi, sources suggest that the company is considering retracting its IPO papers, making necessary revisions, and resubmitting them in the near future. This delay is likely to have a substantial impact on investors, some of whom have held their investments for as long as a decade.

According to the draft papers, for the fiscal year ending March 31, 2023, FirstCry reported a significant sixfold increase in losses, totaling $57.6 million. This increase in losses was primarily due to [specific reasons]. Despite this, its total income more than doubled, reaching $684 million during the same period. This increase in income was driven by [specific factors].