IPO-Bound Zepto Pushing Backers To Offload $250 Mn Stake

SUMMARY

The private equity arms of Motilal Oswal Financial Services and Edelweiss Financial Services are in talks with the startup to buy its shares in a secondary share sale

The move is part of the quick commerce giant’s bid to increase the shareholding of Indian investors to nearly 50% from the current 33% ahead of its IPO

Previously, it was also reported that Zepto was holding discussions with Morgan Stanley and Goldman Sachs to helm its $800 Mn to $1 Bn IPO

With an eye on boosting domestic shareholding ahead of its initial public offering (IPO) later this year, quick commerce major Zepto is reportedly pushing existing investors to offload stakes worth $250 Mn.

Sources told Bloomberg that the private equity arms of Motilal Oswal Financial Services and Edelweiss Financial Services are in talks with the startup to buy its shares in a secondary share sale. As per the report, employees and “some existing” backers will offload their shareholding as part of the transaction.

Zepto is looking to undertake the secondary deals at a valuation of just over $5 Bn. The company last raised $350 Mn in a round led by Motilal Oswal’s private wealth division at the same valuation in November 2024.

Sources reportedly added that the move is part of the quick commerce giant’s bid to increase the shareholding of Indian investors to nearly 50% from the current 33% ahead of the IPO.

This follows reports that Zepto cofounders were mulling raising a debt of $100 Mn to $150 Mn to buy shares from existing investors. The company, along with its backers, was also said to be considering setting up an Indian alternative investment fund (AIF) to transfer part of its overseas shareholding.

This development comes at a time when the Bengaluru-based startup has put its public listing plans in full motion amid a wave of Indian startup IPOs last year.

Zepto’s IPO Plans: Setting its IPO plans in motion, the quick commerce major, earlier this year, shifted its domicile back to India from Singapore.

Previously, it was also reported that the company was holding discussions with a clutch of domestic and global merchant bankers, including Morgan Stanley and Goldman Sachs, for a $800 Mn to $1 Bn IPO.

Not just this, the company, earlier this year, also incorporated a new entity, Zepto Marketplace Private Limited to pivot to a marketplace model from its erstwhile B2B2C structure.

Nevertheless, the move to list on Dalal Street comes at a time when the broader quick commerce ecosystem is witnessing intensifying competition.

The Quick Commerce Onslaught: The rapid adoption of quick commerce in India has paved the way for emergence of giants like Zomato-owned Blinkit and Swiggy Instamart. New entrants like Flipkart (via Minutes) and Tata BigBasket too have entered the 10 minute delivery fray to capitalise on the growing user penchant for quick deliveries.

Not just this, startups like Urban Company, Nykaa and Myntra have also extended the quick delivery to their own respective offerings.

Locking horns with them is Zepto, which too has scaled up rapidly in recent years. The Aadit Palicha-led company managed to double its revenue from operations to INR 4,454.52 Cr in the fiscal year ended 2023-24 (FY24) from INR 2,025.70 Cr in FY23. Meanwhile, it also managed to trim its losses by 2% to INR 1,248.64 Cr in FY24 from INR 1,271.84 Cr in the previous fiscal year.

A report estimates that the quick commerce industry in India has seen a sales surge of 280% in the last two years.