Meesho in talks for secondary deal with Peak XV, Tiger Global at $3.5-3.9 billion valuation

Peak XV Partners, previously known as Sequoia Capital India, and Tiger Global are among the prominent investors engaged in discussions to acquire a stake in Meesho, a SoftBank-backed ecommerce firm, according to sources familiar with the matter.

A secondary share sale is on the horizon, with some angel investors and early backers of Meesho expected to offload shares valued at approximately $200 million. The transaction is poised to occur within a valuation range of $3.5-3.9 billion, contingent upon final negotiations, insiders revealed.

While Peak XV, an early supporter of Meesho, is in advanced talks, Tiger Global's involvement holds significance amid its recent retreat from fresh investments in India and other markets.

"Although Tiger's participation might be relatively smaller, Peak XV is aggressively pursuing a larger portion of the shares on offer," one source commented.

Additionally, tech giant Meta, an existing investor in Meesho, is contemplating selling a portion of its stake, although a definitive decision is pending.

Notably, Meesho will not receive any funds from the secondary share sale, a common practice in such transactions that typically results in a reduction of the company's valuation by 20-30%.

Meesho, valued at $4.9 billion in its last valuation, continues to attract investor interest despite the anticipated valuation adjustment. Talks with other funds, including Norwest Venture Partners, are reportedly in preliminary stages.

Investor Interest Amid Market Dynamics: The discussions between Peak XV Partners and Tiger Global to acquire a stake in Meesho highlight sustained investor interest in the ecommerce sector, even amidst evolving market conditions and adjustments in company valuations.

Secondary Share Sale Dynamics: The anticipated secondary share sale at Meesho, with early backers and angel investors looking to offload shares worth $200 million, reflects a strategic move in the company's growth trajectory. Such transactions, while not providing direct funding to Meesho, indicate investor confidence in the platform's long-term potential.

Competitive Landscape and Market Expansion: Meesho's success in the low-end segment has not gone unnoticed, as evidenced by Amazon India's plans to launch a similar venture. With established players like Flipkart's Shopsy also vying for market share, Meesho's ability to innovate and maintain its competitive edge in this evolving landscape will be crucial for its future growth.

The ecommerce platform's success in the low-end segment has drawn attention, prompting Amazon India to prepare for the launch of a similar venture called Amazon Bazaar. Competing against Meesho, Walmart-owned Flipkart's Shopsy also operates in this space.

Established in 2015 by Vidit Aatrey and Sanjeev Barnwal, Meesho has positioned itself as a marketplace that does not charge commissions from its sellers.

While Meesho's financial performance reflects significant growth, with operating revenue rising by 37% year-on-year to Rs 3,521 crore in the first half of FY24, it reported a narrowed loss of Rs 141 crore during the same period. This follows a substantial reduction in losses for the fiscal year ending March 31, 2023.

For inquiries, Meesho declined to comment, adhering to company policy, while responses from Peak XV, Meta, and Tiger Global are awaited.