FirstCry CEO Supam Maheshwari sells company's shares worth Rs 300 cr ahead of IPO: Report

Supam Maheshwari, the CEO and co-founder of FirstCry, an online retailer specialising in baby goods sold approximately 6.2 million shares of FirstCry at a price of Rs 487.44 each, amounting to a total value of Rs 300 crore. This transaction took place just 10 days before the company filed its IPO papers, reported Moneycontrol quoting the draft red herring prospectus (DRHP).

The sale of these shares is part of a larger pattern, as it was reported that Maheshwari offloaded a total of 9.34 million shares in the six months leading up to the DRHP filing. The valuation of these shares exceeded Rs 455 crore, based on the share price at the time of the transactions. This move by Maheshwari reduced his stake in the company from 7.46 percent to 5.95 percent.

FirstCry, backed by investors such as SoftBank, is expected to set its IPO pricing at a valuation between $3.5 and $3.75 billion. The higher end of this range would represent a 31 percent premium over the December share sale price. In addition to Maheshwari's share sales, other founders and investors, including SoftBank, participated in recent secondary share sales, valuing the company at over Rs 23,000 crore.

The IPO aims to raise Rs 1,816 crore through the issuance of new equity shares, with existing investors like Mahindra & Mahindra, SoftBank, Premji Invest, TPG, NewQuest, and others planning to sell a total of 5.4 crore shares in the offer-for-sale (OFS) component.

In FY23, Maheshwari received a remuneration of Rs 200 crore, which included short-term employment benefits and share-based payments accrual. This was a significant increase from Rs 29 crore in FY22 and Rs 14 crore in FY21. For the first quarter of FY24, his remuneration was Rs 26 crore.

The e-commerce company has also reported a substantial increase in losses for the fiscal year 2023.The company's revenue from operations soared to Rs 5,633 crore in FY23, marking a 135 per cent increase from Rs 2,401 crore in FY22. 

The majority of this revenue, amounting to Rs 5,519 crore, was derived from product sales, which constituted 98 per cent of the total operational revenue.

However, alongside this revenue growth, FirstCry faced a sixfold rise in net losses, reporting a loss of Rs 585 crore before taxes in FY23, compared to a loss of Rs 79 crore in FY22. The escalation in losses can be attributed to mounting expenses, including a significant increase in costs such as depreciation (Rs 294 crore), finance cost (Rs 72 crore), and ESOP costs (Rs 361 crore). These factors contributed to a total expenditure of Rs 6,316 crore in FY23, up from Rs 2,568 crore in the previous fiscal year.

Also Read: Flipkart layoffs: Company plans to fire 1,100-1,500 employees, says report