Zepto in Talks to Raise $150 Million as It Gears Up for IPO and Rapid Valuation Growth
Quick commerce startup Zepto is currently in advanced discussions to raise between $100 million and $150 million from a mix of investors, including Motilal Oswal, Indian family offices, and high net-worth individuals (HNIs), according to sources familiar with the matter. This development comes at a time when the rapid delivery industry is shaking up traditional retail giants like DMart and experiencing exponential growth.
Motilal Oswal, one of India’s prominent financial services firms, is expected to invest around $40 million in Zepto, with an additional $60 million to $110 million likely coming from Indian family offices and HNIs. According to an insider, “Motilal Oswal is facilitating a significant portion of the funding, and the final amount could range from $100 million to $150 million, but it’s still too early to predict the exact figure.” Raamdeo Agrawal, chairman and co-founder of Motilal Oswal, is poised to personally contribute around $15 million of the $40 million, increasing his stake in Zepto. Notably, Agrawal is already an investor in the company, and this new funding round is expected to further strengthen his involvement.
Talks between Zepto and the potential investors have been ongoing for about three months and are likely to finalize soon. The valuation of Zepto is anticipated to remain steady at $5 billion for this funding round. One of the key objectives of the company is to boost domestic ownership ahead of its upcoming initial public offering (IPO), according to sources.
Zepto has already started preparations for its IPO, with investment banking heavyweights Goldman Sachs, Morgan Stanley, and Axis Capital on board to manage the process. More bankers are expected to join the IPO team as the company continues to gear up for the public offering. Zepto’s public listing is seen as a significant step in its journey, given the rapid growth the company has experienced in recent years.
Should the discussions between Motilal Oswal and Zepto come to fruition, this will mark Zepto’s third significant fundraising effort in less than four months. The company is aggressively building its financial resources as it prepares to compete with some of the biggest players in the quick commerce and e-commerce space, including Zomato’s Blinkit, Swiggy (which is also planning an IPO), and others like Walmart-owned Flipkart’s Quick and Tata’s BigBasket.
Earlier this year, Zepto raised $665 million in June at a valuation of $3.6 billion. Just a few weeks later, in August, the company raised an additional $340 million, boosting its valuation to $5 billion. These back-to-back rounds highlight Zepto’s ability to attract substantial investment as it positions itself as a major player in the industry. In total, Zepto has raised $1.6 billion since its inception, with over $1 billion secured in just the last four months, underscoring the growing investor confidence in the company.
If Motilal Oswal’s investment in Zepto materializes, and the company’s valuation climbs to $8 billion, this would mark an extraordinary 500% growth in just 18 months. This surge in valuation is reflective of the broader success of the quick commerce sector, which has consistently outperformed expectations and silenced industry skeptics. Zepto’s ability to grow its valuation from $1.4 billion in August 2023 to a potential $8 billion by the end of 2024 highlights the massive potential within the rapid delivery space.
Zepto’s remarkable growth trajectory comes at a time when the quick commerce sector is becoming an increasingly vital part of the retail landscape. Consumers’ expectations for speed and convenience have driven the demand for rapid delivery services, and companies like Zepto are capitalizing on this trend. As more players enter the space, competition is intensifying, with large companies like Zomato, Swiggy, and BigBasket expanding their operations to meet the growing demand.
However, Zepto’s aggressive fundraising and expansion efforts indicate that the company is not just keeping pace with its competitors but is positioning itself to lead the sector. With significant financial backing and a strong market presence, Zepto is gearing up to solidify its position in the quick commerce ecosystem, further driving its valuation and market dominance.
As Zepto moves closer to its IPO, it is clear that the company’s strategic fundraising and business expansion are setting the stage for what could be one of the most anticipated public listings in the Indian market. With a strong domestic investor base and a rapidly growing business model, Zepto is poised for significant success in the years to come.
In conclusion, Zepto’s continued ability to attract large investments, along with its rapid valuation growth, underscores the immense potential of the quick commerce sector. As the company prepares for its IPO and competes with established giants like Blinkit and Swiggy, its innovative approach and investor confidence will be key drivers of its success. If the current talks with Motilal Oswal and other investors go through, Zepto will have further cemented its position as a dominant force in the Indian quick commerce market, paving the way for a bright future.