Meesho raises $550M, seeks approval to change domicile amid IPO
What's the story
Bengaluru-based e-commerce platform Meesho has successfully raised between $250 million and $270 million in a recent funding round. The round was led by new investors including Tiger Global, Think Investments, and Mars Growth Capital. With this latest investment, the total capital raised in this round has reached approximately $550 million. Most of the funds were secondary investments, according to The Economic Times.
Strategic moves
IPO and merger plans
Meesho plans to file its draft IPO papers in the second half of 2025 and get listed in 2026. However, this will depend on how quickly the National Company Law Tribunal (NCLT) approves it. The company has also started the process of a reverse merger of its Indian unit, Fashnear Technologies, with its US parent Meesho Inc. as part of its IPO strategy.
Market value
Valuation and future prospects
Reportedly, the latest transaction has valued Meesho at approximately $3.9 billion-$4 billion, a slight dip from its peak valuation of $5 billion. US-based Fidelity had previously valued the company at $5 billion in 2021 but slashed Meesho's valuation to $4.1 billion in October 2023, SEC filings revealed. Nevertheless, the company continues to show strong growth in revenue for FY24 YoY.
Business growth
Performance and new initiatives
Meesho has shown impressive growth in important metrics like gross sales, net merchandise volume, and revenue. The company posted a 33% YoY growth in revenue to ₹7,615 crore in FY24. It also managed to lower its adjusted loss for FY24 to ₹53 crore, down 97% from FY23. Over the last year, Meesho also introduced Meesho Mall - a brand-focused platform where it takes commission from firms listed on the marketplace.
Tax considerations
Tax implications and industry trends
The reverse merger process comes with huge tax liabilities. To cover these costs, Meesho raised primary capital in the recently concluded financing round. This move is similar to the strategies adopted by other firms like PhonePe and Groww during their relocations. The trend of Indian start-ups gearing up for public market entry has been on the rise, especially after the wider adoption of new-age firms during 2024.