In a major development for India's startup ecosystem, quick commerce leader Zepto has taken a decisive step towards going public. The company has confidentially submitted draft documents to the Securities and Exchange Board of India (SEBI) for an initial public offering (IPO) that seeks to raise up to Rs 11,000 crore (approximately $1.2 billion), according to sources familiar with the matter.
A Fresh Issue with Partial Stake Sale
The proposed public offering is expected to be largely composed of a fresh issue of shares, which will inject new capital into the company's coffers. Alongside this, a group of Zepto's early investors are planning to partially exit their holdings by offering a portion of their stakes for sale. When approached for comment on the filing, Zepto declined to provide any statement, adhering to the discreet nature of the confidential pre-filing route.
The Race in India's Booming Quick Commerce Market
Founded in 2021 by Stanford University dropouts Aadit Palicha and Kaivalya Vohra, Zepto is a major player in India's hyper-competitive quick commerce arena. It is backed by prominent venture capital firms like General Catalyst and Lightspeed. Its primary rivals are Eternal's Blinkit and Swiggy's Instamart. According to analysts at Morgan Stanley, this market has immense potential and could balloon to a staggering $57 billion by 2030.
Currently, Blinkit holds the pole position with a commanding near 50% market share, leaving Zepto and Instamart trailing by a significant margin. The sector, which initially promised 10-minute delivery of groceries, has rapidly diversified. It now encompasses a wide array of categories such as jewellery, small appliances, toys, electronics accessories, and has even seen occasional offers on high-value items like iPhones. This expansion has been fueled by rapid consumer adoption, a habit solidified for many during the pandemic-era surge in online shopping.
From Unicorn to IPO-Bound Giant
Zepto's journey to the public markets has been marked by rapid valuation growth. In October of this year, the still loss-making company secured a substantial $450 million in a pre-IPO funding round. This round was led by the US pension fund Calpers and pegged Zepto's valuation at $7 billion. This figure represents a sharp 40% increase from its previous valuation of $5 billion.
The Mumbai-born, Bengaluru-based startup has raised a total of about $2 billion in funding since its inception. It earned the coveted 'unicorn' status in August 2023 after an investment infusion of over $200 million, which valued the company at $1.4 billion.
Zepto is now part of a high-profile cohort of Indian startups preparing for public listings in the coming year. This group includes well-known names like PhonePe, Flipkart, and Oyo. India's thriving IPO market is providing a viable avenue for mature startups to list their shares and offer exits to their early-stage investors. This year has already witnessed successful market debuts by other major players such as Lenskart, Meesho, Urban Company, Pine Labs, Physicswallah, and Groww.
