Brainbees Solutions, the holding company of Firstcry, plans to invest over ₹150 crore of the proposed IPO proceeds to ramp up its Gulf operations, specifically in the Kingdom of Saudi Arabia.

The move is aimed at extending its leadership in KSA. Firstcry plans to raise about ₹4,000 crore via IPO including a fresh issue of ₹1,800 crore.

In its Draft Red Herring Prospectus filed with SEBI, Firstcry has said it plans to open 12 new stores over FY25-27, by investing ₹73 crore.

The company also intends to set up its own 2.5L sq. ft. warehouse by deploying ₹83 crore. This investment will help the company to set up its offline presence and distribution in KSA.

In India, Firstcry operates 936 retail stores, supported by 80 warehouses and stockists.

The spend on childcare products is at ₹60,000 per child in KSA i.e. over seven times that of India (₹8,000). This is compounded by a high birth rate (17.5 per thousand population as of 2021), which outstrips India and China.

This makes KSA the largest Childcare products market in GCC, which was estimated at ₹49,400 crore in 2022 and is projected to grow at a CAGR of four per cent till 2027 to reach ₹59,000-₹63,000 crore.

The growth is primarily driven by rising penetration of e-commerce, higher employment rates, and growing concern for children’s health and safety.

While Firstcry competes in KSA with players such as Amazon, Landmark Group-owned Babyshop and other brands are facing headwinds in the Middle East.

UK-based childcare and parenting brand Mothercare, which derived 43 per cent of its revenues from the Middle East and 13 per cent from KSA, saw an 11 per cent and 20 per cent decline in sales respectively due to ‘local factors’, according to Mothercare PLC’s 2023 Annual Report.

However, Firstcry entered KSA only in August, 2022, with the intention to replicate its India playbook. FirstCry Arabia offers over 167,500 SKUs from over 3,100 brands across categories.

Firstcry’s international GMV (Gross Merchandise Value) has grown 2.3 times between FY21 (GMV ₹377 crore) and FY23 (GMV ₹874 crore), representing a 52 per cent CAGR.

The average order value has increased consistently from ₹5,311 in FY21 to ₹7,644 in Q1FY24.

However, this is partially because of the recent start and a low base effect.