Indian retailer FirstCry's parent to raise $218 million in IPO

BENGALURU (Reuters) -India's FirstCry parent on Thursday filed for an initial public offering to raise 18.16 billion rupees ($218 million), making it the first pure-play baby products and childcare retailer to go public in the country.

FirstCry's parent Brainbees Solutions will sell fresh shares in the IPO and so will other investors, including its biggest shareholder SoftBank, which held a 25.5% share in the company as of Dec. 27, draft IPO papers showed.

SoftBank, which will sell 20.3 million shares at the IPO, sold a stake worth 6 billion rupees in FirstCry this week, according to multiple media reports.

Other investors in FirstCry, including tech-to-tractors firm Mahindra And Mahindra and U.S. private equity fund TPG, will also sell stakes.

The total size of the IPO was not immediately clear.

The childcare products market in India is projected to grow at a compound annual growth rate of 13%-14% to reach 4.5 trillion rupees-4.8 trillion rupees in 2027 as parents are increasingly shifting their preferences towards branded goods, according to Redseer Research.

FirstCry, which competes in certain segments with Shoppers Stop, Hopscotch and Flipkart-owned Myntra, saw its losses widen six-fold in fiscal 2022-2023 due to rising costs.

The company plans to use funds from the IPO to expand its network in India and Saudi Arabia, and to clear leases for existing Indian stores. It has 936 stores in India.

Robust economic growth and hope that Indian Prime Minister Narendra Modi's ruling party will return to power after general elections in early 2024 has boosted benchmark indices to record highs, fueling a rise in IPOs in late 2023.

Morgan Stanley, BofA Securities, and Kotak Mahindra Capital are among the investment bankers for the FirstCry share sale.

($1 = 83.2780 Indian rupees)

(Reporting by Nandan Mandayam Sethuraman NR in Bengaluru; Editing by Savio D'Souza and Mrigank Dhaniwala)