Early Investors in Meesho Consider Secondary Investments at a Valuation of $3-3.5 Billion

Angel investors and initial institutional stakeholders of Meesho, an e-commerce company, are currently engaged in talks with potential investors to sell their shares. Negotiations are underway for a transaction, with the valuation targeted in the range of $3-3.5 billion, although this valuation is subject to potential adjustments, according to individuals familiar with the matter.
‘Entities such as WestBridge Capital and Norwest Venture Partners have engaged in discussions with the early investors of Meesho, according to sources.

This highlights the increasing prevalence of secondary share sales in late-stage companies. Additionally, new investors are expressing interest in assets that have demonstrated resilience amid the funding challenges and managed to curtail operating expenses over the past year or so.

In October, Venture Highway, an early investor in Meesho, divested a portion of its stake to WestBridge Capital. Despite the transaction, Venture Highway retains a 1% ownership in the startup, backed by SoftBank and Meta, which was valued at almost $5 billion in 2021.

“WestBridge has indicated it wants to buy more in Meesho and Norwest. They has also held talks,” a person briefed on the discussions said. “The conversations are largely around the pricing of the deal, as older investors want to make an exit now.”

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Certainly, secondary transactions typically occur at a discount compared to the most recent primary valuation. The magnitude of this discount, though, could influence the timing of the company’s pursuit of new primary capital. A spokesperson for Meesho declined to provide a comment, citing company policy. Queries directed to Norwest Venture Partners and WestBridge Capital did not receive any response.

“There are a few more investors who have shown interest,” another person aware of the matter said. The names of these investors weren’t immediately available

Sources indicate that Venture Highway intends to divest its remaining 1% stake in Meesho as part of this round. Early investors in Meesho include Maninder Gulati from Oyo and former Vodafone group chief Arun Sarin. On December 29, Meesho reported a 48% reduction in its loss for the fiscal year ending March 31, amounting to Rs 1,675 crore. During the same period, its operating revenue surged by 77% to Rs 5,735 crore.

In the first half of FY24, the online marketplace disclosed a 37% year-on-year increase in operating revenue, reaching Rs 3,521 crore, coupled with a significant 90% reduction in losses to Rs 141 crore.’

The company said it has achieved profitability for the September quarter but did not give any numbers. In August, Meesho chief executive Vidit Aatrey had said the firm had clocked its first profit after tax for the month of July.