No Respite: Fidelity Cuts Valuation Of Meesho, Pine Labs Again

US-based asset management company Fidelity has once again slashed valuation of its portfolio startups Meesho and Pine Labs.

As per filings seen by The Economic Times, Fidelity has slashed the valuation of Meesho to $4.1 Bn at the end of October 2023, down from $5 Bn in August last year. This is even 16% lower than the $4.9 Bn valuation at which the ecommerce platform raised $570 Mn back in 2021.

On similar lines, Fidelity trimmed the valuation of the payments solution platform Pine Labs to $3 Bn in October 2023 as against $4.7 Bn at the end of August. The fintech startup was last pegged at more than $5 Bn after raising a $150 Mn funding round in 2022.

Commenting on the markdown, a Meesho spokesperson told Moneycontrol, “Funds attribute value to their portfolio investments, taking into account multiple factors. We would not be able to comment on the specifics, however, per share price changes are not fully indicative of valuation changes and should be looked at in conjunction with the number of shares.”

Meesho’s new $4.1 Bn valuation on the books of Fidelity is closer to the $3-3.5 Bn value pegged by WestBridge Capital and Norwest Venture Partners during potential secondary sale talks, reported earlier this year.

It must be noted that Fidelity has been continuously revisiting the valuation of its Indian portfolio startups in the past one year. It cut Meesho’s valuation by 9.7% to $4.4 Bn in April 2023 and followed it up by marking it up internally by 5.41% at the end of July.

On the other hand, Fidelity also, first, slashed Pine Labs’ valuation by more than 9% in May 2023 and then marked it up 4.6% in July last year.

The development comes at a time when Pine Labs has been looking to move its base to India as part of its potential IPO plans. Despite the public listing plans, the fintech company continues to post losses, reporting a loss of INR 1,675 Cr in FY23, down 48% YoY, as against a 77% YoY jump in operating revenue to INR 5,735 Cr.

Following the funding bull run of 2021 and early 2022, the Indian startup ecosystem has been hit hard by macroeconomic headwinds since mid-2022. As a result, funding has dried up and investors have taken a cautious approach towards new investments as well as their portfolio startups.

Investors are veering more towards sustainable companies while startups, owing to losses or other reasons, have been witnessing valuation markdowns from investors. To be sure, a valuation markdown by an investor does not immediately mean that a startup’s valuation has fallen.

In many cases, it reflects the investment firm’s internal churn, priorities, and reevaluation of their stake in a given startup based on factors such as financial performance and future outlook.