Some angel investors and other early backers of Meesho are likely to sell shares worth around $200 million, these people said. The transaction is likely to take place at a valuation of $3.5-3.9 billion, depending on the final terms, they added.
While Peak XV is an early investor in Meesho, Tiger’s discussions assume significance amid a pullback by the New York-based fund from making fresh investments in India and other markets.
“Tiger’s participation may be relatively smaller but Peak XV is in advanced stages of talks,” one of the people said. “Peak XV is looking to take a bigger pie of the shares on the block,” another person said.
ETtechTech major Meta, an existing investor in Meesho, may look to sell a part of its stake, these people said. But the Facebook and WhatsApp owner has yet to make a final decision, they added.
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Meesho will not get any funds from the secondary share sale.
Meesho, which was last valued at $4.9 billion, will see its valuation being cut by 20-30%. This is typical of secondary transactions. ET first reported about the financing round at Meesho on January 2.
A spokesperson for Meesho declined to comment, citing company policy. Emails sent to Peak XV, Meta and Tiger Global did not elicit any response.
People familiar with the discussions said other funds like Norwest Venture Partners are also in discussions with Meesho, but those talks are preliminary.
In October last year, Meesho’s first institutional investor, Venture Highway, sold a part of its stake in the company to WestBridge Capital. People in the know said the fund wants to make a complete exit from the ecommerce platform, which focuses on low-priced products.
WestBridge Capital, which backs both private and public market companies, may buy more shares in Meesho, ET had reported earlier in January.
In December, Meesho said its loss for the year ended March 31, 2023 narrowed to nearly half at Rs 1,675 crore, while operating revenue grew 77% to Rs 5,735 crore. For the first half of FY24, the online marketplace said its operating revenue rose 37% year-on-year to Rs 3,521 crore, with a 90% reduction in loss to Rs 141 crore.
Meesho’s success in the low-end segment has most recently led to Amazon India planning a similar venture on its marketplace. ET reported on February 21 that Amazon India was readying to launch a new vertical featuring low-priced, unbranded fashion and lifestyle products, called Amazon Bazaar. Walmart-owned Flipkart’s Shopsy is the other major player in the space competing against Meesho.
Founded by Vidit Aatrey and Sanjeev Barnwal in 2015, Meesho does not charge commissions from its sellers, unlike Amazon and Flipkart. The company earns revenue through advertising and by offering logistics services to the sellers on its platform.