Zepto Delays IPO, Eyes ₹1,000 Cr Funding at Lower Valuation

Quick commerce startup Zepto has postponed its initial public offering (IPO) plans, now targeting approximately ₹1,000 crore (around $105 million) in pre-IPO funding.

The company seeks a valuation of $4-4.5 billion for this investment round, marking a significant reduction from its previous $7 billion valuation recorded in October last year.

Key Funding Figures

• Pre-IPO funding target: ₹1,000 crore (around $105 million)
• Target valuation for this round: $4-4.5 billion
• Previous valuation (October last year): $7 billion
• Valuation reduction: over 30%
• Current domestic shareholding: over 40%

Zepto’s immediate priority for this funding round is to secure backing primarily from domestic investors, who currently hold more than 40% of the company’s shares.

Valuation Discrepancies Led to Delay

The initial target for Zepto’s public listing was set for July, but disagreements over valuation expectations ultimately led to the current delay.

This situation mirrors fintech company PhonePe, which also paused its IPO plans due to similar valuation discrepancies in the market.

Investor Valuation Insights

• Zepto’s adjusted IPO valuation expectation: $5.1 billion
• Domestic investors’ valuation: $3-3.5 billion
• Foreign investors’ pre-money valuation interest: $4.5 billion

The company also intends to reduce the original IPO issue size, which was initially planned for up to ₹8,010 crore through a fresh issue of shares.

Next Steps and Market Context

Zepto anticipates finalizing this crucial pre-IPO funding round within a couple of weeks.

Following the successful completion of this funding, the quick commerce firm will then proceed with filing a Red Herring Prospectus (RHP) with SEBI.

The quick delivery sector faces heightened competition, with major players like Amazon and Flipkart aggressively expanding, contributing to investor caution regarding long-term growth prospects.