Wanted to pick a valuation that attracted ‘right’ long-term shareholders: Meesho’s Aatrey

Meesho chose a valuation aimed at attracting “right” long-term shareholders, CEO Vidit Aatrey said, as it prepares to list next month at a likely $5.9-billion market cap—above its last private valuation but below its earlier $7–8 billion target, reflecting a broader trend among new-age loss-making firms.

“We wanted to basically pick a valuation that attracted the right long-term shareholders for us. We wanted to get the right shareholders, make sure they make money in the long run, and what's the price that would make it happen, is how we have discovered it,” said Meesho Co-founder, Chairman, and CEO Vidit Aatrey at the company’s pre-IPO press conference in Mumbai.  

The company set the price band at Rs 105 to 111, which values the company at Rs 50,000 crore or $5.9 billion at the upper end of the band. In the private market, Meesho’s peak valuation had topped $5.1 billion in 2021.

“Of course, the management team, the existing shareholders, and the board want this to be a value creation event for investors who come in. There are 200 million users after all, so I think it's a very large platform, and there's a long-term orientation. In all our discussions with the management team, they've been very clear that they want this not just to list well, but to trade well and attract a wide cross-section of investors, both institutional, HNI (high networth individuals), and retail,” shared Rajat Ranjan, Managing Director, Dart, Kotak Mahindra Capital, Meesho’s IPO Banker

Meesho, which competes with players like Amazon, Flipkart, is set to open its IPO on Wednesday next week. Anchor bidding for investors will open on Tuesday, 2 December. 

Meesho’s decision to take a conservative approach to valuation follows a pattern seen across several loss-making startups that listed last year, including Ola Electric, FirstCry and Swiggy. In each case, companies opted to “leave money on the table” to create room for public-market investors to see immediate upside and to avoid the sharp post-listing corrections that hit some earlier tech IPOs, such as Paytm in 2021. 

Earlier this month, even fintech company Pine Labs got listed at $2.9 billion, much less than the $6 billion price it was targeting earlier. In the private market, Pine Labs was valued at almost $5 billion.

For profitable startups, however, the story seems to be different. Groww, PhysicsWallah and Lenskart have taken the opposite approach, seeking to list at a premium to their last private valuations, aided by stronger unit economics.