India: SoftBank may pick up over 40% stake in Firstcry for $400m

Visual from Firstcry website

Japanese investment giant SoftBank is reportedly close to acquiring over 40 per cent stake in BrainBees Solutions, which owns and operates baby and mother care products retailer FirstCry, for around $400 million.

According to a source-based report in The Economic Times, SoftBank is likely to pick up an estimated 42 per cent stake in the Pune-based venture, valuing it at $600-700 million.

“The deal was signed earlier this week and is likely to close by the month-end,” said one of the sources cited in the report. The company’s founders – Supam Maheshwari and Amitava Saha – are expected to retain their 12-14 per cent stake in the firm.

Last year, it was also reported that Chinese investment major Alibaba was also looking to participate in FirstCry’s ongoing funding round.

FirstCry has raised about $125 million so far from investors including IDG Ventures India (now Chiratae Ventures), SAIF Partners, New Enterprise Associates and Vertex Ventures, the venture capital arm of Temasek.

FirstCry is not only the dominant player in online baby products retailing, but also has a sizeable presence offline, which makes it more attractive for investors.

In 2016, FirstCry acquired the franchise division of Mahindra Retail Pvt. Ltd, a subsidiary of Mahindra and Mahindra Ltd, which owned online babycare business BabyOye for $54.2 million in a cash-and-stock deal. It was also said to be in talks to acquire rights to operate stores of UK-based kids products company Mothercare in India.

The funding from SoftBank is likely to help FirstCry grow both online and offline to take on bigger rivals with broader reach such as Amazon, Walmart-owned Flipkart, Reliance and the Future Group. The capital will also be used to scale up the recently launched parenting platform adding multi-media formats as well as for foray into private labels, said the news report.

Armed with the successful sale of its stake in Indian e-commerce major Flipkart for around $4 billion last year, SoftBank is now looking to pump in more money into market leaders in India.

It was recently reported that the Japanese technology conglomerate had sought the Competition Commission of India’s (CCI) approval to acquire a 37.87 per cent stake in logistics firm Delhivery Pvt Ltd. Late last year, it was also said to have offered to invest $1 billion more in Indian Uber-rival Ola, as well as double down on its investment in online grocer Grofers.

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