In a strategic move aimed at expanding its foothold in India’s booming e-commerce sector, WestBridge Capital is reportedly in advanced discussions to acquire a significant stake in Meesho, a leading social commerce startup. This potential investment marks WestBridge’s continued commitment to supporting startups in India and Southeast Asia, showcasing its two-decade history of fostering entrepreneurial growth in the region.
According to sources familiar with the matter, WestBridge Capital is actively engaged in negotiations with various Meesho investors, including Venture Highway, to acquire their stakes in the company. Although the discussions are ongoing, current terms indicate that Meesho’s valuation is set at a discount of more than 25% compared to its previous valuation.
As of now, Meesho has chosen not to comment on the matter, while Venture Highway and WestBridge Capital have refrained from responding to media inquiries.
Meesho, which boasts prominent backers such as Meta, Y Combinator, Prosus, Elevation, and Peak XV, achieved a valuation of approximately $4.9 billion during a funding round completed in the second half of 2021. It is not uncommon for investors to divest their stakes in privately-held firms at discounted prices. Fidelity, a co-leader in Meesho’s last funding round, continues to value the company at over $4.5 billion, as per the monthly disclosures of the U.S.-based asset management firm.
Venture Highway’s association with Meesho dates back eight years when it initially invested around $100,000, valuing the startup at approximately $1 million. Over the years, Venture Highway has consistently supported Meesho by participating in nearly all subsequent funding rounds. With a 5% stake in the company, Venture Highway’s holdings were worth approximately $250 million based on the previous valuation. The firm has now expressed interest in a full exit from its investment in the startup.
This move by WestBridge Capital comes as Meesho has shown significant financial improvement in recent quarters. Meesho recently announced that it achieved profitability at the consolidated PAT (Profit After Tax) level in July. Renowned for its competitively priced, diverse, and unbranded product assortment, Meesho recorded a Gross Merchandise Value (GMV) of $4.5 billion in the calendar year 2022.
Jefferies, in a note to its clients earlier this year, highlighted Meesho’s leading position in various fashion and lifestyle categories. It mentioned that, over the years, Meesho has diversified its offerings from primarily focusing on apparel to becoming a comprehensive horizontal marketplace. Today, nearly half of Meesho’s GMV is generated from non-apparel categories.
This potential acquisition by WestBridge Capital is significant not only for its strategic implications but also because WestBridge typically enters investments in startups during their Series B to Series D funding rounds, typically at valuations below $250 million. If the deal materializes, it would underscore WestBridge’s belief in Meesho’s growth potential and the promising future of India’s e-commerce landscape.
