Two companies backed by SoftBank--Brainbees Solutions Ltd, the parent company of baby products retailer FirstCry and e-commerce-focused SaaS company Unicommerce eSolutions--have got approval from the Securities and Exchange Board of India for their initial public offering of shares.
The approvals come amid robust demand for shares offered in IPOs that has led to many venture capital- and private equity-backed companies such as ixigo, Go Digit, Aadhar Housing Finance Limited IPO, TBO Tek, Indegene, and Awfis to list on stock exchanges in the last two months.
Many others, including Emcure Pharmaceuticals, Ola Electric, SK Finance, and Northern Finance, are also in the process to list.
FirstCry, one of the largest retailers of baby and kids’ products, is looking to raise Rs 1,816 crore ($218 million) as primary offering in the IPO. Its issue will also have an offer for sale (OFS) for 54.4 million shares by existing shareholders.
Japanese technology investment goliath SoftBank, US private equity firm TPG, PremjiInvest, the private investment arm of Wipro’s Azim Premji, are among the shareholders that are divesting their stake as part of the OFS.
The company had re-filed its draft red herring prospectus, having to withdraw its initial application on SEBI's observation that said it had not complied with regulations that mandate an IPO-bound company to share all key business metrics that it has shared with prospective investors in the last three years.
FirstCry sells kid products across categories that include diapers, feeding and nursing, skin and health care, toys, clothes, footwear, and fashion accessories. It had 8.8 million annual transacting customers, as of March 2023. The company’s total revenue from operations for the nine-months ended December 31 was Rs 4,814 crore, with the total loss at Rs 278 crore.
Its EBITDA during the period was Rs 37.4 crore.
Backers of Unicommerce are looking to sell about 29.84 million shares as OFS in the company's IPO, with SoftBank, the company’s parent AceVector Ltd and B2 Capital, an entity associated with AceVector’s owners, looking to offload stake.
In a pre-IPO transaction in December 2023, Unicommerce got a valuation tag of Rs 665 crore (about $80 million), as per its draft red herring prospectus.
AceVector was earlier known as Snapdeal Ltd, the e-commerce company founded by Kunal Bahl and Rohit Bansal. B2 Capital is controlled by Bahl and Bansal.
Snapdeal acquired a majority stake in Unicommerce in 2015 in a cash-and-stock transaction. It tried selling Unicommerce to Infibeam in 2018, but the negotiations were called off as certain conditions were not fulfilled in the stipulated period.
SoftBank joined Unicommerce’s cap table in November 2021 with an investment of around Rs 111.6 crore. While the firm has partially sold its stake previously, it still owns about 29.23% after the pre-IPO transaction. Post the IPO, this may be reduced to half.
At a valuation of $80 million for Unicommerce, SoftBank is currently sitting on an internal rate of return (IRR) of around 35-40%. That’s above the 20-30% IRR that venture capital and private equity firms chase in rupee terms in India at the fund level.
Unicommerce hasn’t revealed the IPO pricing but it is likely to command a higher valuation than what it managed in the pre-IPO transaction given the bullish stock markets.
