US-based asset management firm Fidelity has once again revised the valuations of its portfolio companies, Meesho and Pine Labs, signaling ongoing challenges in the Indian startup ecosystem. According to recent filings reported by The Economic Times, Fidelity has lowered Meesho’s valuation to $4.1 Bn as of October 2023, a 16% drop from the $5 Bn valuation recorded in August 2022. Simultaneously, Pine Labs’ valuation has been reduced to $3 Bn in October 2023 from $4.7 Bn in August. The market conditions and investors’ cautious approach continue to impact the valuation dynamics of prominent startups.
Key Points:
- Meesho’s Valuation Adjustment: Fidelity’s latest valuation for Meesho stands at $4.1 Bn, down from $5 Bn in August 2022. This marks a 16% decrease and positions Meesho’s valuation closer to estimates from WestBridge Capital and Norwest Venture Partners, who valued it in the $3-3.5 Bn range during potential secondary sale talks.
- Pine Labs Valuation Revision: Pine Labs’ valuation has been revised down to $3 Bn from $4.7 Bn in August 2023. The fintech startup, which raised $150 Mn in 2022, has witnessed fluctuations in its valuation over the past year.
- Continuous Valuation Adjustments: Fidelity has been actively reassessing the valuations of its Indian portfolio companies over the past year. In April 2023, Meesho’s valuation was reduced by 9.7% to $4.4 Bn, followed by a 5.41% internal markup in July. Pine Labs experienced a similar pattern with a 9% markdown in May 2023 and a subsequent 4.6% increase in July 2023.
- Market Challenges and Funding Constraints: The developments come amid ongoing challenges in the Indian startup ecosystem, characterized by a funding slowdown and cautious investor sentiment. Macro-economic headwinds since mid-2022 have prompted investors to adopt a more discerning approach, emphasizing sustainability.
- Impact on IPO Plans: Pine Labs, despite contemplating a move of its base to India as part of potential IPO plans, reported a loss of INR 1,675 Cr in FY23. The company’s IPO aspirations coincide with market dynamics and its efforts to address losses.
As investors navigate the evolving landscape, valuation adjustments highlight the shifting priorities, internal evaluations, and repositioning of stakes in response to the broader economic climate.
