FirstCry, an omnichannel retailer, is in talks with a number of sovereign funds to help some of its shareholders sell shares of the business at a valuation of close to $3 billion. This began after negotiations with the private equity firm Kedaara Capital collapsed a few months ago. The money is being positioned for the Pune-based business as a pre-IPO round, they added, though conversations are still in their early stages.

Masayoshi Son-led SoftBank, the company that holds the largest stake in the omnichannel retailer of mother and baby products, is expected to sell some of its 29% ownership if the sale goes through. Norms for local ownership According to these individuals who asked to remain anonymous because the conversations are private, a formal secondary share sale of about $100 million is likely to take place.

"Discussions have been going on for a while, but the agreement has not yet been signed. In this secondary share sale, Middle Eastern sovereigns and some pension funds might participate, the source said. Deal parameters may alter as negotiations go. FirstCry may potentially aim to raise more domestic funding to support local ownership in the company.

As a multi-brand retailer, the company is required to abide by the laws governing foreign investments and limit foreign ownership to less than 51%. Similar to Nykaa, FirstCry is a company that is majority owned by domestic investors and is controlled by Indian citizens. Along with SoftBank, Premji Invest (9–11%), Mahindra Retail (12–13%), and TPG (6-7%) are some of its other major investors.

After receiving funding from Premji Invest for the last time, the company had a $2.7 billion valuation. This investment was made after a National Investment and Infrastructure Fund investment failed to materialise despite the transaction receiving approval from India's competition watchdog. The secondary sale is anticipated to occur at the same price as its prior fundraising effort. After months of being engaged, earlier negotiations with Kedaara were at a higher price but were unsuccessful, according to a second source.

SoftBank and NewQuest Capital Partners were attempting to sell FirstCry shares on the secondary market on August 10 of last year, valuing the company at $3.5 to $4 billion. FirstCry raised additional cash from Premji Invest because it has engaged in protracted negotiations to reduce its foreign holding before going public. Last year, the company intended to submit its draught IPO documents, but it postponed those preparations when the markets became unsteady.

SoftBank selling stakes- Over the past six to eight months, SoftBank has been partially exiting some of its India investments in listed firms such as Delhivery, Paytm and Policybazaar, as it looks to distribute cash to sponsors or limited partners in the SoftBank Vision Fund. In November last year, the Japanese group sold $200 million of stake in digital payments company Paytm, while more recently, it pulled out $130 million by liquidating shares in logistics firm Delhivery.

SoftBank has made exits of just under $6 billion from its India bets so far, including the $4 billion it fetched from Flipkart’s sale to Walmart in 2018. Since then, the group has made a return to Flipkart by backing it again in 2021. The firm's most recent exit from a privately held company in India was in eyewear retailer Lenskart, when Abu Dhabi Investment Authority invested $500 million in it. The Japanese firm is learnt to have garnered about $90-100 million from the Lenskart deal.

The selling streak for SoftBank comes amid a technology rout in the public markets faced by tech heavy investors. On Wednesday, the Financial Times newspaper reported that SoftBank was expected to sell almost all of its remaining shares in the Alibaba Group, keeping only a 3.8% stake in the Chinese ecommerce behemoth. FirstCry financials- FirstCry is among a small group of profitable online-first Indian businesses. While its audited results for the financial year ended March 31, 2022, are yet to be filed with the ministry of corporate affairs, people aware of the numbers said it is expected to post a profit, excluding cost towards employee stock ownership plans.

For the financial year 2021, FirstCry reported a net profit of Rs 216 crore, compared to a loss of Rs 191 crore the previous year. Revenue rose to Rs 1,603 crore in FY21, from Rs 814 crore the year before. The retailer has more than 650 offline stores too. It also owns an ecommerce roll-up platform, Globalbees, which is valued at $1.1 billion. Globalbees has acquired more than 26 firms, with a bouquet of 55 brands.

Xpressbees, a third-party logistics firm now valued at $1.5 billion, led by Amitava Saha, was spun out of FirstCry parent Brainbees Solutions, which was founded by Supam Maheshwari along with Saha, Prashant Jadhav and Sanket Hattimattur in 2010.