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The Mahindra group’s stake in online baby products retailer FirstCry was the result of an experiment in trying to understand how large business groups incubate and build new businesses and create a sense of entrepreneurship inside a large group, said Anand Mahindra, Chairperson of Mahindra and Mahindra, at the listing ceremony of Brainbees Solutions, which owns FirstCry.
M&M held a 10.98 per cent in the company and divested less than 1 per cent in the offer-for-sale portion of FirstCry’s initial public offering.
New-age ventures
Recounting the story of its stake in the start-up, Mahindra said the year FirstCry was born, in 2010, was the same year that Mahindra Partners was launched. “That was our attempt at trying to create this experiment in entrepreneurship.” Mahindra Partners’ mandate was to invest in incubating companies, especially in new age ventures. He onboarded two colleagues, Zhooben Bhiwandiwala and Parag Shah, to oversee the operations.
“To our minds, the really differentiating mentality of start-ups is that they worship at the temple of value creation, almost to the exclusion of everything else. They are not there necessarily to build empires, they are there to build and create value; and that is why they are so agile, so nimble and so focused. That’s why nobody bets on large companies to create new businesses.”
The first such company in which they invested was Mahindra Logistics, which was then a division of M&M. It was followed by Susten, in the renewables energy business. Both were successful experiments. They then worked on Mahindra Accelo and transformed that “from a trading business to a manufacturing powerhouse.”
This was followed by investments in Mom & Me, which made clothing and products for newborns. In a quest to consolidate, the company acquired Baby Oye, which was in the same space. FirstCry, co-founded by Supam Maheshwari, was their rival.
Mahindra said that Zhooben then came up with the idea to consolidate their own company with FirstCry, saying that they would be better off supporting him than fighting him. “That is why we merged with FirstCry and at that time became the largest shareholder. After that Supam went like a rocket ahead. He has created a delivery system that is the envy of many global online retailers, which, I suppose, is what attracted Softbank of course to come in,” said Mahindra.
Brainbees listed at ₹651 at a 40 per cent premium to its issue price on NSE.
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