As startup listings pick up pace, Meesho plans to raise $480 million via fresh issue and offer partial exits to early backers in its long-awaited public debut.
SEBI Greenlights Meesho’s IPO Plans
E-commerce startup Meesho has secured approval from the Securities and Exchange Board of India (SEBI) to proceed with its initial public offering (IPO), becoming the latest new-age company to hit the public markets.
- The company filed its updated draft red herring prospectus (UDRHP) with SEBI.
- The IPO is set to raise a total of $700–800 million (₹6,500–7,000 crore).
- It includes a fresh issue worth $480 million (₹4,250 crore) and an offer for sale (OFS) component of $250–300 million (₹2,200–2,600 crore).
Use of Proceeds: Tech and Brand Building in Focus
The funds raised through the fresh issue will be directed toward:
- Technology and platform upgrades
- Brand marketing and expansion
- General corporate purposes
This capital is crucial as Meesho strengthens its position in India’s highly competitive value-driven e-commerce segment, competing with players like Flipkart, Amazon, and Jiomart.
Valuation Outlook: Aiming for $7–8 Billion
While Meesho hasn’t finalized its IPO price band, it is expected to dilute around 10% equity, implying a valuation between $7–8 billion.
- This is lower than the $10 billion Meesho previously targeted.
- The reduction is likely a move to attract retail investors by “leaving money on the table.”
The book-building process, typically lasting 30–45 days, will determine the final valuation before the IPO is launched.
Key Shareholders Selling in the Offer for Sale
The OFS will offer partial exits to some of Meesho’s early institutional investors:
- Peak XV Partners (formerly Sequoia Capital India)
- Elevation Capital
- Venture Highway (now part of General Catalyst)
- Y Combinator
Founders Vidit Aatrey and Sanjeev Barnwal will also offload part of their holdings.
Interestingly, Aatrey and Barnwal have joined the emerging trend of startup founders tagging themselves as “promoters”, aligning with corporate governance norms traditionally seen in listed companies.
Profitability: Still a Work in Progress
Despite its IPO ambitions, Meesho remains unprofitable:
- FY24 revenue: ₹7,615 crore
- FY24 net loss: ₹305 crore
- FY25 net loss: ₹3,941 crore (due to exceptional items from redomiciling from the US to India)
- FY25 net loss excluding exceptionals: ₹108 crore
- Q1 FY26 net loss: ₹289 crore
The sharp spike in FY25 loss was due to the one-time cost of flipping its base from Delaware to India, a strategic move aimed at aligning the business closer to its primary market and easing regulatory obligations.
Growth Over Profit: Meesho’s Near-Term Strategy
Despite narrowing its core losses, Meesho continues to prioritize growth:
- The platform is investing aggressively in customer acquisition and technology.
- It focuses on scaling up across tier 2–4 cities, which form the backbone of its user base.
Management has indicated that profitability remains a longer-term objective, as the near-term strategy is to capture market share and deepen user engagement.
IPO Outlook: More Startups Set to Follow
Meesho’s IPO comes amid a resurgence in public market listings by new-age tech companies. With SEBI approvals now in place, Meesho is expected to kick off its IPO process in the next few months, once market conditions stabilize and book-building concludes.
If successful, Meesho will join other startup listings like Zomato, Paytm, Nykaa, and Mamaearth, while paving the way for others currently awaiting regulatory nods.
