Brainbees Solutions, Parent Company of Firstcry, Announces ₹150 Crore Investment for Gulf Expansion

In a strategic move to strengthen its presence in the Gulf region, Brainbees Solutions, the holding company of popular childcare retailer Firstcry, has revealed plans to invest over ₹150 crore from the anticipated IPO proceeds. The primary target for expansion is the Kingdom of Saudi Arabia (KSA), where the company aims to extend its leadership.

The upcoming Initial Public Offering (IPO) is expected to generate approximately ₹4,000 crore, with a fresh issue of ₹1,800 crore. Out of this, Firstcry plans to allocate ₹73 crore for opening 12 new stores between FY25-27, as outlined in its Draft Red Herring Prospectus submitted to SEBI.

Another significant allocation of ₹83 crore is earmarked for establishing a 2.5 lakh sq. ft. warehouse in KSA, facilitating the development of offline infrastructure and distribution channels.

With a current presence of 936 retail stores, supported by 80 warehouses and stockists in India, Firstcry is strategically expanding into the lucrative KSA market. The childcare products market in KSA is valued at ₹60,000 per child, more than seven times that of India (₹8,000), fueled by a high birth rate of 17.5 per thousand population as of 2021.

KSA stands as the largest childcare products market in the Gulf Cooperation Council (GCC), estimated at ₹49,400 crore in 2022 and projected to grow at a CAGR of four percent till 2027, reaching ₹59,000-₹63,000 crore. The growth is attributed to the increasing penetration of e-commerce, higher employment rates, and a growing concern for children's health and safety.

While facing competition from players like Amazon and Landmark Group-owned Babyshop in KSA, Firstcry aims to replicate its successful India playbook. FirstCry Arabia, established in August 2022, offers an extensive range of over 167,500 SKUs from more than 3,100 brands across various categories.

Firstcry's international Gross Merchandise Value (GMV) has witnessed impressive growth, reaching ₹874 crore in FY23 from ₹377 crore in FY21, representing a 52 percent Compound Annual Growth Rate (CAGR). The average order value has also risen consistently, increasing from ₹5,311 in FY21 to ₹7,644 in Q1FY24, although partially influenced by the recent launch and a low base effect.

The expansion into KSA comes at a time when other international brands, like UK-based Mothercare, have faced sales declines in the Middle East due to 'local factors,' highlighting the challenges and opportunities in the region's childcare market.

HBL