According to a report by ET, Peak XV Partners (formerly known as Sequoia Capital India) and Tiger Global, along with several other investors, are among those who have held talks to acquire a stake in SoftBank-backed ecommerce firm Meesho in a secondary deal, as per insiders.
According to sources, it’s anticipated that certain angel investors and initial supporters of Meesho may sell shares valued at approximately $200 million. The deal is expected to be conducted at a valuation ranging from $3.5 billion to $3.9 billion, contingent upon the final terms.
As Peak XV has been an early investor in Meesho, the significance of Tiger’s discussions increases, especially considering the New York-based fund’s retreat from making new investments in India and other markets.
“Tiger’s participation may be relatively smaller but Peak XV is in advanced stages of talks,” one of the people said. “Peak XV is looking to take a bigger pie of the shares on the block,” another person said.
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According to sources, Meta, a prominent player in the tech industry and an existing investor in Meesho, might consider selling a portion of its stake. However, the decision is still pending, as the owner of Facebook and WhatsApp has not finalized its stance yet.
Meesho will not get any funds from the secondary share sale.
Meesho, previously valued at $4.9 billion, is expected to undergo a valuation reduction of 20-30%, which is common in secondary transactions.
A representative for Meesho opted not to provide a comment, citing company policy. Emails directed to Peak XV, Meta, and Tiger Global did not yield any responses.
Insiders familiar with the discussions mentioned that other funds, such as Norwest Venture Partners, are also in talks with Meesho, although these discussions are at an early stage.
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In October last year, Meesho’s first institutional investor, Venture Highway, sold a part of its stake in the company to WestBridge Capital. According to insiders, the fund wants to make a complete exit from the ecommerce platform, which focuses on low-priced products.
Earlier in January, it was reported that WestBridge Capital, which supports both private and public market companies, might acquire additional shares in Meesho.
In December, Meesho reported that its loss for the fiscal year ending March 31, 2023, narrowed to almost half, reaching INR 1,675 crore, while operating revenue surged by 77% to INR 5,735 crore. Additionally, for the first half of FY24, the online marketplace indicated a 37% year-on-year increase in operating revenue to INR 3,521 crore, coupled with a significant 90% reduction in loss to INR 141 crore.
Meesho’s success in the low-end segment has recently led to Amazon India planning a similar venture on its marketplace. It was reported on February 21 that Amazon India was gearing up to launch a new vertical featuring low-priced, unbranded fashion and lifestyle products, called Amazon Bazaar. Walmart-owned Flipkart’s Shopsy is the other major player in the space competing against Meesho.
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Established in 2015 by Vidit Aatrey and Sanjeev Barnwal, Meesho operates on a distinct business model compared to giants like Amazon and Flipkart. Instead of charging commissions from its sellers, Meesho generates revenue through advertising and by providing logistics services to sellers on its platform.
