Fidelity, a well-known U.S. asset manager, has recently reduced the value of its stake in Indian social commerce startup Meesho by 33.6%. This adjustment gives Meesho a revised valuation of $3.5 billion, taking into account outstanding shares.
In its latest monthly disclosure, Fidelity revealed that its investment in Meesho was valued at $27.8 million at the end of December, down from the $41.9 million it invested in the second half of 2022 through a specific mutual fund unit. This markdown reflects the ongoing changes in the startup’s valuation, which was previously marked down to $4.1 billion at the end of October and valued at $4.9 billion in its previous funding round.
The adjustment in valuation comes after a secondary sale transaction in late 2021, where Meesho’s early backer Venture Highway sold a portion of its equity to WestBridge Capital, as reported by TechCrunch. This sale valued Meesho at $3.5 billion, likely influencing Fidelity’s reassessment.
A spokesperson for Meesho told TechCrunch, “Funds consider several factors when determining the value of their portfolio investments, including the valuation of comparable companies. Based on Fidelity’s filings and the number of shares it holds compared to the total outstanding fully diluted shares, Meesho’s valuation is evaluated at $3.5 billion. The increase in outstanding shares, primarily due to the expansion of the ESOP pool, may have contributed to this change in valuation.”
On the other hand, Fidelity has slightly increased the value of its holdings in Reddit, Gupshup, and X, as reported in its monthly disclosure. However, all of these startups are still significantly below their original investment amounts.
Meesho, with its notable investors such as Meta, Peak XV, Prosus Ventures, B Capital, and SoftBank, is one of the fastest growing e-commerce startups in India. Its current GMV (gross merchandise value) run rate has surpassed $5 billion, as reported by AllianceBernstein earlier this month. Additionally, Meesho plans to expand its services, including building a financial platform and scaling its grocery delivery business, according to Indian daily Economic Times.
Making over 50% of its sales in Tier 2 and below cities, Meesho has successfully targeted a demographic that has been overlooked by larger e-commerce players like Flipkart and Amazon. This strategic approach has paid off for Meesho, with AllianceBernstein noting its focus on smaller towns and cost-conscious customers as a significant factor in its success.