Bengaluru: India’s largest baby products retailer Firstcry is in talks to raise $100-150 million from new and existing investors as it seeks to increase its lead in the market, three people familiar with the matter said.

The Mahindra group-backed retailer has revived talks with Temasek Holdings and is also in talks with Chinese internet giant Tencent Holdings and a Chinese investment firm to raise its next round, one of the people said, requesting anonymity. Mint couldn’t ascertain the identity of the Chinese investment firm.

Firstcry held funding talks with Temasek last year but the discussions cooled because of differences over valuation. The companies revived talks this year. The firm has appointed Morgan Stanley as its investment bank for the deal.

Firstcry, Temasek and Tencent did not respond to emails seeking comment.

Since its founding in 2010 by Supam Maheshwari and Amitava Saha, Firstcry (Brainbees Solutions Pvt. Ltd) has raised more than $100 million from Mahindra, IDG Ventures India, New Enterprise Associates, SAIF Partners, Vertex Ventures and others.

The Pune-based firm is one of the very few vertical e-commerce firms that has flourished in the past three years despite competition from Flipkart and Amazon India.

Unlike many e-commerce firms, Firstcry generates a significant part of its revenues from its network of more than 300 stores, although the offline business is smaller than its online side.

Most companies have struggled to expand in the babycare business that is still largely dominated by mom-and-pop stores. High real estate and customer acquisition costs have crippled the efforts of most babycare retailers to build large businesses. Firstcry has gone further than others by using its online and offline channels to offer a wide assortment of low-priced products to customers.

In October 2016, Firstcry bought Mahindra’s struggling babycare business BabyOye Retail Pvt. Ltd for 362 crore in a cash-and-stock deal. The acquisition strengthened its position as a leader and added several stores to its network.

Firstcry reported a loss of 393 crore on revenue of 239 crore for the year ended March 2017, the latest for which numbers are available.

If Firstcry’s talks with Tencent materialise, it will add to the growing India portfolio of the Chinese internet giant that has a market capitalisation of more than $500 billion.

Tencent is a minority investor in companies such as Flipkart, Ola, Byju’s, Practo and Hike. Tencent, along with arch-rival Alibaba Group and smartphone maker Xiaomi, has led Chinese investments into Indian start-ups.

Over the past three years, Chinese companies have picked up stakes in dozens of start-ups partly in order to beat slowing growth at home.

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