MUMBAI: Softbank, Ratan Tata and Sachin Tendulkar backed Firstcry, which claims to be the market leader in the ecommerce space catering to women and children, but has not made a single penny in profits in its 14 years of operations, has fixed the price band for its Rs 4,200 crore issue at a hefty Rs 440-465/piece.
The Pune-based ecommerce firm but with significant offline presence with over 1,000 stores had been heavily losing money since its inception in 2010 and had Rs 321.51 crore net loss in FY24, down from Rs 486 crore in FY23 when it had revenue of Rs 6,481 crore and Rs 5,632.5 crore, respectively. The issue opens on August 6 with the floor price at 220 times and the cap price is 232.5 times the face value of the shares for a company that’s heavily in debt.
Like in the case of Ola Electric, which is in IPO process now, because of the issue pricing some of the investors like Tata will gain manifold, others like Tendulkar and Rajan Pai on Manipal will lose heavily.
Firstcry parent Brainbees Solutions had first filed draft IPO papers with the Securities and Exchange Board(SEBI) last December but withdrew the draft papers after the capital markets regulator sought more clarity on key performance indicators (KPIs). Sebi had initially sought 25 KPIs of which the company could provide only five or six in its first set of filings.
Among individual selling shareholders, chief executive Supam Maheshwari who is also one of the four founders, owns 5.95 percent in the company while Ratan Tata holds just 0.02 percent in preference shares. Tata had bought 77,900 preference shares at a price of Rs 84.72 a share, amounting to an investment of around Rs 66 lakh some years back. And Tata is a selling shareholder in the IPO and is sitting on over 5x gains on the basis of the offer’s price band.
Another big gainer is Mahindra & Mahindra, which owns 11 percent, with an almost 6x jump in the value of its holdings. Its average price of acquisition was Rs 77.96 apiece. The single largest shareholder in the firm is the Japanese investment giant Softbank with a little over 25 percent. Under-5 percent is owned by employees through Esops.
Among the big losers in the IPO are Sachin Tendulkar and his wife Anjali who bought over 2 lakh shares last year at Rs 487.44; the family offices of Marico’s Harsh Mariwala, Manipal Group’s Ranjan Pai and Fireside Ventures founder Kanwaljit Singh, who bought shares last year, will can lose up to 10 percent if they participate in the OFS but they are not selling their shareholding in the IPO.
The unrealised loss is due to the price band for the company’s IPO has been set at Rs 440-Rs 465 apiece, lower than their buying price of Rs 487.44. However, it can be noted that most shareholders will be gainers.
Softbank and Firstcry co-founder Maheshwari made big bucks last year selling a part of their holdings. Maheshwari, who currently holds about 5.95 percent stake, sold shares worth Rs 300 crore in the pre-IPO round in 2023.
In this sale process the Tendulkar's bought over 2 lakh shares, and so did the Mariwala’s family office Sharrp Ventures which bought 20.5 lakh shares, Ranjan Pai’s family office bought 51.3 lakh shares, Kanwaljit Singh bought 3,07,730 shares, Infosys co-founder Kris Gopalakrishnan’s family office bought 6,15,460 shares, and DSP founder Hemendra Kothari bought 8,20,614 shares.
But some investors in that round such as Premji Invest and Chiratae are still likely to be making gains as they invested in previous rounds at lower valuations. For example, one of Premji Invest’s, investment vehicles is selling 86 lakh shares in the IPO which were bought at Rs 280.87, registering at least 57 percent gains. Two funds of the family office of Wipro’s Azim Premji cumulatively hold a stake of over 10.3 percent at present.