Meesho: Fidelity further marks down fair value of Meesho

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A fund managed by financial services major Fidelity has further marked down the fair value of ecommerce firm Meesho, according to a monthly disclosure made by the fund.
As per ET’s calculations, the fair value of Meesho, according to Fidelity’s holdings, was around $3.2 billion.

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However, in a statement Meesho said that based on the number of shares held by Fidelity and the current number of total outstanding fully diluted shares, the firm’s valuation was assessed at $3.5 billion.

“The increase in the number of outstanding shares, notably due to the ESOP pool expansion, could have contributed to this valuation shift,” a Meesho spokesperson said. ET could not ascertain the total number of outstanding shares of the firm.

On January 25, ET reported that funds managed by Fidelity had cut down Meesho’s fair value to around $4.1 billion as on October 31, 2023, down from around $5 billion assigned two months earlier. Fidelity had originally invested in Meesho in September, 2021 in a funding round that had valued the firm at $4.9 billion.

“Funds attribute value to their portfolio investments, considering various factors such as the valuation of comparable companies,” the Meesho spokesperson added in a statement.

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Crossover funds like Fidelity’s, which invest in both publicly traded and privately held companies, periodically review the valuation of their portfolio companies. This kind of revision can stem from a variety of factors like the changes in their public market counterparts.A number of Meesho’s angel investors and early institutional shareholders are in discussions to divest their stakes in the firm at valuations of around $3-3.5 billion, ET had reported on January 2.

In October, India-focused investment firm WestBridge Capital bought a stake in Meesho from Venture Highway, one of its early investors, at a valuation of around $3 billion in a secondary transaction. Besides WestBridge, entities like Norwest Venture Partners also held talks with Meesho’s early investors, people in the know said.

On Tuesday, ET reported that Meesho was looking to build a financial services platform and scale up its grocery delivery business in the next financial year, having focused on cutting down costs in the recent past.

Meesho’s gross merchandise value (GMV) currently stands at around $5 billion, compared to market leader Flipkart’s $29 billion, according to a report from Bernstein. In December 2023, however, Meesho’s user base grew 32% year on year, as against 21% for Flipkart, the report said. Meesho was helped by its “strategic focus on Tier 2+ cities due to its mass positioning” and its “zero commission model,” it added.

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