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Ranjan Pai, chairman of Manipal Group, is in advanced stages of talks to pick up a stake in SoftBank-backed ecommerce firm FirstCry, multiple people aware of the matter said.
Pai is expected to invest around Rs 250 crore in the ecommerce firm as part of a broader secondary share sale at FirstCry at a valuation of close to $3 billion, they said.
Other institutional investors are also in the process of picking up a secondary stake in the Pune-based firm from existing shareholders.
“The total share sale would be around $50-60 million, or close to Rs 500 crore (current dollar-rate) and Pai is expected to put Rs 250 crore,” a person aware of the matter said.
Pai and a spokesperson for FirstCry declined to comment.
“Ranjan as well as other marquee investment funds are expected to close the investment soon, formally,” another person briefed on the matter said.
FirstCry is in the list of portfolio firms of SoftBank in India slated to go public next year.
In an interview to ET on August 9, Navneet Govil, executive managing partner and CFO of SoftBank Vision Fund, had said FirstCry is expected to file its draft IPO paper before the end of 2023.
The latest secondary share sale talks have been in the making for some time as ET had reported on April 14 that FirstCry had engaged with sovereign funds for a similar transaction.
In a secondary share sale, existing investors sell shares to new investors in parts or in full. Thus, the money does not go to company coffers.
FirstCry, where SoftBank holds about 29%, has been looking to increase ownership of local investors in the firm and dilute foreign shareholders, especially with its IPO plans for 2024.
SoftBank in particular has been looking to dilute its stake to under 26% so it doesn’t get classified as a promoter of the parent firm of the omnichannel retailer – Brainbees Solutions.
Premji Invest owns about 9-11% stake in the kids and baby product retailer while Mahindra Retail holds 12-13% and TPG has a 6-7% stake.
FirstCry, a multi-brand retailer, has to keep its foreign shareholding to below 51% in line with the country’s FDI laws for ecommerce. Last year, FirstCry had finalised its plans to file its draft IPO papers for a public issue of as much as $1 billion but had to halt those plans due to market volatility and muted response to other new-age firms in 2022.
SoftBank’s Govil told ET last week that once a portfolio firm goes public, SoftBank, at some point, would sell its shares to monetise.
FirstCry has been among the rare ecommerce firms that are profitable. In FY22, however, it slipped into losses of around Rs 79 crore even as operating revenue jumped by around 50% to Rs 2,401 crore. In FY21, FirstCry had a profit of Rs 216 crore.
Pai’s interests
Once formalised, FirstCry would be Pai’s third key investment in new-age firms in recent times as he is planning to pick up a significant stake in e-pharmacy PharmEasy and has finalised an investment in Byju’s test prep subsidiary Aakash Institute. Pai has been an investor in Byju’s previously through Aarin Capital, but the fund made an exit from the edtech firms many years ago.
“Pai has been in talks with FirstCry leadership for some time and now the investment is fructifying. He (Pai) has been looking for a wider portfolio exposure in new economy space,” a person aware of the discussions said.
ET reported on August 8, saying Pai is nearing a $80 million investment in Aakash where he would buy a part of stake in the brick-and-mortar coaching firm. For PharmEasy, his investment plans are linked to a rights issue at the cash strapped firm expected to start later this month.
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