WestBridge evaluates buying stake in Meesho at a discount

WestBridge Capital is in advanced stages of talks to purchase shares of Meesho worth tens of millions of dollars in the secondary market, according to two people familiar with the matter, as the high-profile venture firm looks to broaden its bet on e-commerce.

The crossover fund, with a two-decade history of focusing on startups in India and Southeast Asia, is engaging with Venture Highway to buy out the younger firm’s stake in the social commerce startup, the people said. The deliberations are ongoing and current terms value the Indian startup at a discount of 25-35% over the previous valuation, one of the people said.

Meesho declined to comment. Venture Highway and WestBridge Capital didn’t respond to requests for comment.

Meesho — which counts Meta, YC, Prosus, SoftBank, Elevation and Peak XV among its backers — was valued at about $4.9 billion in a round it closed in the second half of 2021. It’s not uncommon for investors to sell stakes in privately held firms at discounted prices. Fidelity, which co-led Meesho’s last round, continues to value Meesho at over $4.5 billion, according to the U.S. asset manager’s monthly disclosures.

Venture Highway originally backed Meesho eight years ago, when it invested about $100,000 that valued the startup at about $1 million. The firm, whose 3% stake in Meesho is worth about $150 million at the previous valuation, has been a long-term backer of Meesho, investing in nearly all subsequent rounds. It has expressed an interest in making a full exit at the startup.

India’s e-commerce market in the calendar year 2022 by GMV figures. Image and Data: Jefferies

WestBridge is eyeing a roughly 2% stake in Meesho, another person familiar with the matter said.

Its interest in Meesho follows the startup dramatically improving its finances in recent quarters. Meesho said last month that it was profitable at the consolidated PAT level in the month of July. Meesho, which has created a niche through competitively priced, diverse and unbranded assortment of products, had a GMV of $4.5 billion in the calendar year 2022.

“Meesho has a leading position across multiple fashion & lifestyle categories,” Jefferies wrote in a note to clients earlier this year. “During the early years, Meesho primarily focused on apparel, but has diversified into other lifestyle categories over time as it evolved into a truly horizontal pure-play marketplace. Today, nearly half of its GMV comes from non-apparel categories.”

WestBridge is also an investor in DealShare, a startup that initially leveraged social platforms for commerce. It’s currently grappling with some existential concerns about its business. The deal, if it materializes, would also be remarkable because WestBridge tends to invest in startups at their Series B-D rounds, usually making an entry at a valuation below $250 million.