Qcom player Zepto plans to raise $200-250 million ahead of IPO listing

The move is to increase the shareholding of domestic investors before the company goes for a listing this year

Quick commerce (qcom) player Zepto, which is eyeing an initial public offering (IPO), is in the process of raising $200-250 million through a secondary transaction, according to sources.

 

It plans to increase the shareholding of domestic investors before it goes for listing this year.

 

The company is discussing the fundraise plans with Edelweiss Financial Services and existing investor Motilal Oswal Financial Services, among others.  

 

Of the $250 million, around $200 million worth of shares will be allocated to domestic investors.

 

“In order to increase domestic ownership at the company, international players are putting out a shareholding of nearly $200 million. International investors will sell equity to domestic ones,” according to a source in the know. 

 

The transactions are expected to take place at a valuation of over $5 billion. This is the same as the last round of funding.

 

At present, the shareholding of domestic shareholders is around 30-33 per cent. After the fundraise, this is expected to go up by 4-7 per cent, said the source. Zepto declined to comment on the development.

 

The Y Combinator-backed firm has international investors such as General Catalyst, Epiq Capital Advisors, StepStone Group, DST Global and Nexus Venture Partners, among others.

 

In an earlier interaction with Business Standard, Zepto cofounder and chief executive officer (CEO) Aadit Palicha shed light on the shareholding and fundraising plans.

 

The interaction took place after the company raised $350 million from Motilal Oswal, Ranjan Pai’s Claypond Capital and other Indian investors, bringing in more domestic shareholders. 

 

“We are over 30 per cent domestically-owned after the fundraise. Kaivalya Vohra (cofounder) and I own almost 20 per cent of the company, and we will go public with around that share. We are not planning to raise another fund but it might end up happening in a quarter or two. We have around $1.3 billion in cash balance. So, we don’t need more primary capital. We would mostly raise secondary capital to bring in more high-quality domestic investors before the IPO,” Palicha said. 

 

Meanwhile, the buzz of Zepto raising funds has impacted its listed competitors — Zomato and Swiggy.

 

According to analysts, Zepto’s fresh fundraise could spur competition in the qcom space and delay the road to profitability.

 

The shares of Zomato on Tuesday dropped 5.6 per cent to ₹210, while that of Swiggy fell 4.7 per cent to end at ₹335.

 

After Tuesday’s close, Zomato and Swiggy were valued at ₹2.02 trillion and ₹76,480 crore, respectively.  

In a nutshell 

>Discussions spearheaded by Edelweiss Financial Services and Motilal Oswal Financial Services

>Around $200 mn worth of shares to be allocated to domestic investors

>Transactions expected to take place at valuation of over $5 billion