Brainbees Solutions IPO: 10 key risks investors should know before investing to FirstCry IPO

Under the FirstCry name, Brainbees Solutions Ltd operates omnichannel children's apparel businesses. The company's price band has been set between ₹440 and ₹465 per equity share, with a face value of ₹2. Tuesday, August 6, is the planned date of the Brainbees Solutions IPO subscription, which will end on Thursday, August 8. A Brainbees Solutions IPO lot consists of 32 equity shares, and further lots of 32 equity shares are available.

The Brainbees Solutions initial public offering (IPO) basis for share allocation is expected to be finalised on Friday, August 9. The firm will commence refunds on Monday, August 12, and the shares will be deposited to the allottees' demat accounts the same day as the refund. On Tuesday, August 13, Brainbees Solutions' share price is probably going to be posted on the BSE and NSE.

Firstcry IPO, which is worth ₹4,193 crore, comprises a fresh issue of ₹1,666 crore, and an offer-for-sale (OFS) of 54,359,733 equity shares by the selling shareholder.

In the OFS, the corporate selling shareholders are SVF Frog (Cayman) Ltd (20,318,050 equity shares), Mahindra & Mahindra Ltd (2,806,174 equity shares), PI Opportunities Fund- 1 (8,601,292 equity shares), TPG Growth V SF Markets Pte. Ltd. (3,899,525 equity shares), NewQuest Asia Investments III (4,141,043 equity shares).

The firm intends to utilise the net proceeds to fund expenditures for the establishment of a new, contemporary facility and a warehouse in India. Lease payments for their current, recognised contemporary stores as well as plans for investment in their subsidiary are being spent.

Here are some of the key risks listed by the company in its Red-Herring Prospectus (RHP):

• There is a chance that the firm may continue to experience negative net cash flows as it has in the past.
• The company intends to use the money from net proceeds to open its new, contemporary stores and warehouses in the Kingdom of Saudi Arabia and India, although it has not yet decided on the precise sites or assets for these endeavours.
• The company's intended development plans, which include constructing new, contemporary storefronts and establishing new warehouses, face the danger of unexpected delays and cost overruns.
• The company's business, financial situation, and operational outcomes might be negatively impacted by the failure of its investments in D2C brands made through its Globalbees Brands platform.
• Any delay might have an effect on the operations and profitability of the Net Proceeds, which will be distributed over an extended period of time.
• A part of the net proceeds will be used to fund some recently founded companies as well as subsidiaries that have experienced losses. The business cannot guarantee that the investments it makes will increase its profitability or provide the desired outcomes.

• If the company has extra money, it will keep investing in fixed deposits, as it now does. They may temporarily place some of the net proceeds in fixed deposits if they are unable to use the entire amount for company operations expansion.
• The company has established deposit investments and plans to keep doing so in the event that it has extra money. A part of the net proceeds may be temporarily placed in fixed deposits if they are unable to use the entire amount for business operations expansion.
• The firm has lost money in the past and could lose more in the future, which might have a negative effect on both their business and the equity shares' value.
• The demand for the products sold on the company's multichannel retailing platform may decline if they are unable to recognise and effectively respond to changing customer preferences, trends, and spending patterns for mothers', babies', and kids' products. This could have a negative impact on their business, operating results, financial condition, and cash flows.

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