Zepto, the quick commerce startup, has put its initial public offering (IPO) plans on hold and is instead pursuing a pre-IPO fundraising round of about ₹1,000 crore (approximately $105 million), according to inc42.com. The decision follows valuation concerns that emerged during negotiations with institutional investors, who valued the company between $2.5 billion and $3 billion, below Zepto's expectations.
Under Securities and Exchange Board of India (SEBI) regulations, companies can raise up to 20% of their proposed fresh issue through a pre-IPO placement, with the amount raised deducted from the IPO's fresh issue component. Zepto is expected to raise the capital primarily from domestic investors. Existing investors such as Glade Brook, General Catalyst, Goodwater Capital, and Nexus Venture Partners could also participate in the round, inc42.com reported.
The valuation reset marks a significant adjustment from earlier expectations, which had been higher. This development comes amid a challenging market environment for startups seeking public listings. Zepto's move to raise funds through a pre-IPO round aligns with a broader trend among startups to secure capital while managing valuation pressures ahead of going public.
Zepto's IPO timeline remains uncertain as the company has paused its public listing preparations. The pre-IPO round is expected to provide the startup with additional runway and flexibility amid market uncertainties, according to inc42.com.