IPO-bound FirstCry CEO sells Rs 300 crore worth of shares

FirstCry IPO: Supam Maheshwari, the founder and CEO of FirstCry, a leading omnichannel kids wear brand set for an IPO, has offloaded shares worth Rs 300 crore just days before the company's Initial Public Offering (IPO) prospectus filing.

CEO's strategic stake adjustment

The CEO, Maheshwari, strategically divested over 1 per cent of his equity in FirstCry, reducing his stake from 7.46 per cent to 5.95 per cent. The move involved the sale of 62 lakh shares and took place shortly before the filing of the IPO prospectus, indicating a calculated financial decision by the founder.

IPO valuation and price dynamics

FirstCry's IPO is anticipated to be priced between $3.5 billion to $3.75 billion, with a significant portion expected to come from an offer-for-sale (OFS) involving major shareholders like SoftBank, Mahindra & Mahindra, and others. The sale of Maheshwari's shares, estimated at Rs 302 crore based on the highest share price in the past year, adds an intriguing element to the overall IPO dynamics.

Selling shareholders and their stakes

The IPO comprises both a fresh issue of shares and an offer-for-sale. Key selling shareholders include SoftBank Group, Mahindra & Mahindra and Ratan Tata. SoftBank, holding the largest stake at 25.5 per cent, plays a key role in the IPO's success.

Expansion plans and utilisation of IPO proceeds

FirstCry's IPO aims to raise Rs 1,816 crore, with a primary focus on expanding its retail footprint in India and Saudi Arabia. As of June 30, 2023, the parent company, Brainbees Solutions, boasted a total of 936 stores, with plans to open 483 new stores over the next three fiscal years, combining the BabyHug and FirstCry brands.

CEO's compensation and ESOP Trends

Maheshwari's remuneration history, including a notable Rs 200 crore in FY23, sheds light on the CEO's commitment and financial rewards. Additionally, FirstCry's Employee Stock Ownership Plan (ESOP) costs witnessed significant growth, doubling from Rs 46 crore in FY21 to Rs 92 crore in FY22 and surging nearly fourfold to Rs 361 crore in FY23.

Financial performance and market positioning

Despite being backed by SoftBank, FirstCry reported a widening loss from Rs 79 crore in FY22 to Rs 486 crore in FY23. However, the company's strong revenue growth and market presence, boasting over 104 million downloads of its mobile application in India, position it as a major player in the childcare products market.