FirstCry In Talks To Sell A Stake In The Company At $3 Bn Valuation

FirstCry, which is backed by SoftBank, is in talks with a number of sovereign funds to sell a stake in the business at a $3 billion valuation. These conversations began after discussions with the private equity firm Kedaara Capital fell down a few months ago, according to a report by the Economic Times.

People with knowledge of the situation further disclosed to ET that, despite the early stages of the discussions, the fundraising is being planned as a pre-IPO round for the Pune-based company.

According to insiders, a secondary share sale of about $100 million is likely to be formalised. The company's largest stakeholder, Masayoshi Son-led SoftBank, is also likely to sell some of its 29% stake if the merger goes through.

The transaction hasn't been finalised despite months of continued negotiations. According to the source, this secondary share sale may attract Middle Eastern sovereigns and some pension funds. As negotiations go, deal parameters may alter.

FirstCry is an omnichannel infant product marketplace. Following the most recent $315 million investment, which was spearheaded by Premji Investment last year, its current valuation is $2.7 billion.

Currently, Mahindra Retail and the US-based private equity firm TPG are the two other major shareholders in the business, with Premji Invest holding a 9-11% interest. They each own around 12-13% and 6% of the company, respectively.

Due to unstable market conditions, the company postponed filing its draft red herring prospectus (DRHP), which was due last year. It joined a list of numerous start-ups that put their IPO plans on hold as a result of the state of the world, including boAt, Droom, Pharmeasy, and Snapdeal. Only two startups are competing for an IPO this year: travel technology provider OYO and personal care business Mamaearth.