Zepto delays IPO, to refile in two qtrs: CEO
Quick commerce startup Zepto has decided to postpone its listing and will refile its draft papers for an initial public offering (IPO) after two quarters
Quick commerce startup Zepto has decided to postpone its listing and will refile its draft papers for an initial public offering (IPO) after two quarters, cofounder and chief executive Aadit Palicha told employees during a companywide townhall on Friday, according to people briefed on the development. ET was the first to report on July 29 that Zepto was likely to defer its listing after the valuation being discussed with public market investors came in sharply below its last private funding round.People familiar with the discussions said the IPO pricing received from large institutional investors for Zepto’s anchor book was in the $2.5-3 billion range. This marked a further reduction from the $3.5-4 billion valuation that was being discussed earlier in July, and was significantly below the $7 billion valuation at which the company raised its last private funding round in October last year.During a 30-minute townhall held at the company’s Bengaluru headquarters, the 24-year-old Palicha told employees that Zepto will instead look to raise private capital from its existing domestic investors before returning to the public markets.“Palicha also told employees that the company plans to raise a private round from its existing domestic investors and will tighten its focus on reducing cash burn while continuing to drive growth before the company refiles its draft prospectus,” one of the people cited above said.
“The plan is to raise around Rs 1,000 crore, although the final amount has not yet been decided and could change over the coming days,” the person added.132769426Palicha is also understood to have reassured employees that the company’s inability to secure favourable terms from public market investors “should not be seen as a reflection of their performance”.His comments assume significance given Zepto’s current cash position and its need to raise fresh capital. As of March 31, the company had a cash balance of Rs 5,681 crore, according to its draft prospectus. During the January-March quarter, it reported an operating loss of Rs 1,247 crore. In comparison, Blinkit parent Eternal had Rs 18,288 crore and Instamart parent Swiggy had Rs 14,367 crore in cash on books as of June 30.
Both these companies also run profitable food delivery businesses.Zepto has been engaged in an aggressive race for market share, opening dark stores and ramping up customer acquisition amid intense competition in quick commerce. Rivals, including Blinkit, Instamart, Amazon and Walmart-owned Flipkart, have continued to expand their
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