Social e-commerce platform Meesho is actively engaging with domestic and international institutional investors for a significant pre-IPO funding round as it prepares for its highly anticipated public market debut next month. According to sources familiar with the development, the company aims to raise between $50 million to $70 million through this placement.
Strategic Pre-IPO Placement Details
The company is currently in discussions with several global sovereign wealth funds that have expressed strong interest in participating in the pre-IPO round. One source confirmed that the final size of Meesho's initial public offering will be adjusted based on the outcome of this pre-IPO placement process.
"Meesho is in active discussions with institutional investors as there is substantial demand for the asset," revealed a second person familiar with the negotiations. The source added that these conversations are expected to progress significantly over the next 7-10 days as price discovery mechanisms take shape.
IPO Structure and Financial Backing
Meesho submitted its updated draft IPO papers on October 18, following an earlier confidential filing this year. The public offering is expected to comprise fresh capital raising of ₹4,250 crore along with an offer for sale (OFS) component involving 175.6 million existing shares.
Prominent shareholders participating in the OFS include Elevation Capital, Peak XV Partners, Y Combinator, founders Vidit Aatrey and Sanjeev Kumar, along with Man Hay Tam and VH Capital. The company has assembled a formidable team of investment banks to manage the issue, including Kotak Mahindra Capital, Axis Capital, Morgan Stanley India, JPMorgan, and Citigroup.
Financial Performance and Market Position
Founded in 2015 by Vidit Aatrey and Sanjeev Barnwal, Meesho has demonstrated remarkable revenue growth despite widening losses. The company's operating revenue surged 25% to reach ₹9,390 crore in FY25, though its net loss expanded significantly to ₹3,941 crore from ₹327.6 crore in the previous fiscal year.
Bloomberg News recently reported that Meesho is negotiating with SBI Funds Management Ltd. for the pre-IPO placement, seeking a valuation of approximately $6 billion. This represents a substantial premium over its last private valuation of $4 billion in 2023.
Meesho has raised over $1.3 billion in total private funding from prominent investors including SoftBank, WestBridge Capital, and Fidelity Investments. The company, which relocated its base from the United States to India in May, received formal approval from SEBI for its IPO last month.
Utilization of IPO Proceeds and Future Plans
The company plans to allocate the fresh capital raised through the IPO toward several strategic initiatives. Key areas of investment include enhancing cloud infrastructure through its subsidiary Meesho Technologies Pvt. Ltd., strengthening its machine learning and AI capabilities by hiring specialized talent, undertaking extensive branding and marketing campaigns, and pursuing strategic acquisitions.
Meesho's platform has revolutionized social commerce in India by providing small businesses and individual entrepreneurs access to millions of customers nationwide. The company offers comprehensive support including pan-India logistics, payment services, and customer-support capabilities, with particular focus on serving online shoppers in tier-2 and tier-3 cities.
Meesho joins a growing list of new-age Indian startups including Groww, Lenskart, Pine Labs, and PhysicsWallah that have chosen to go public this quarter, marking one of the most active periods in Indian capital markets this year. The company declined to comment on the ongoing pre-IPO discussions when approached by media representatives.
