Major funds push back against Zepto's IPO valuation
Domestic investors reject quick-commerce startup's pricing expectations.
1Roadblock to IPO
India's top mutual funds are pushing back against Zepto's proposed $4-5 billion valuation for its upcoming IPO. Fund managers argue even the discounted valuation doesn't reflect current market conditions, potentially jeopardizing the quick-commerce giant's plans to go public within two weeks.
2Valuation standoff
Investors are demanding a 30-40% discount to Zepto's proposed valuation. The company justifies its pricing by comparing itself to rivals Swiggy and Eternal, but funds highlight Zepto's lack of a food delivery business as a critical gap. Investment bankers are now scrambling to bridge the divide.
3New-age company performance
Fund managers remain cautious after witnessing post-IPO performance of recent tech listings. For instance, Swiggy's shares still trade 35% below its 2024 IPO price. This skepticism is making investors increasingly wary of premium valuations for loss-making startups.
4Seeking alternative investors
Facing resistance from institutional investors, Zepto is turning to high-net-worth individuals and family offices. While the company is making aggressive efforts to secure commitments, experts warn that without major fund participation, the IPO's success remains uncertain.
5Competitive pressures
Zepto operates solely in the hyper-competitive quick-commerce space for electronics and groceries. Funds express concerns that this narrow focus may limit long-term growth potential, especially compared to rivals like Swiggy that offer broader service ecosystems.
6Litmus test for IPO market
Zepto's valuation debate could set an important precedent for other Indian tech startups eyeing public listings. Growing investor caution may force future IPO candidates to adopt more realistic pricing expectations in the current market environment.
Original article: Economic Times — Zepto'nun IPO değerlemesi için büyük fonlardan itiraz