Quick commerce company Zepto is preparing to raise around Rs 1,000 crore (about $105 million) through a pre-IPO funding round at a valuation of about $4.5 billion, people familiar with the development told TNIE.
The investment is expected to come from domestic institutional investors as well as existing backers including General Catalyst, Goodwater Capital and Nexus Venture Partners.
The fundraising plan comes after the company delayed its initial public offering (IPO) by a few weeks. Zepto had earlier planned to raise about Rs 5,000-6,000 crore through the IPO. Under Securities and Exchange Board of India (SEBI) rules, companies planning to go public can raise up to 20% of their proposed fresh issue through a pre-IPO placement. Any money raised in this way is deducted from the fresh issue portion of the IPO.
The latest move follows a review of the proposed IPO size and valuation after discussions with potential institutional investors. Some domestic mutual funds are understood to have preferred a lower valuation than the company was seeking, while ongoing talks with investors have also contributed to the revised listing schedule.
Earlier this month, it emerged that Zepto was considering reducing the size of its IPO by about 20%, bringing the planned fresh issue down to around $650-700 million from an earlier target of about $850 million. The proposed revision was linked to investor feedback and prevailing market conditions.
If the pre-IPO round is completed, the Rs 1,000 crore fundraising would represent the maximum amount allowed under SEBI’s 20% rule based on the revised fresh issue size under consideration. The remaining funds would be raised through the public offering. The IPO will still depend on regulatory approvals and market conditions.