Meesho closes $550 million round; moves NCLT to shift domicile

Ecommerce firm Meesho has closed another $250-$270 million in financing with new investors Tiger Global, Think Investments, Mars Growth Capital joining an ongoing capital raise, taking the round’s total to about $550 million, majority of which is in secondary, people aware of the development told ET.

The SoftBank- and Prosus-backed ecommerce firm has also filed an application at the National Company Law Tribunal (NCLT) Bengaluru for a reverse merger of its India unit, Fashnear Technologies, with the US parent, Meesho Inc., paving the way for its planned initial public offering (IPO), said the people cited earlier.

The Bengaluru-based firm is now aiming to file the draft IPO papers in the second half of 2025 and a potential listing in 2026, contingent on the speed of NCLT approval, they said.

If successful, this may emerge as among the first horizontal ecommerce to list on local bourses.

Peak XV and WestBridge Capital are among the existing investors participating in the funding round, of which the primary capital raise may be used for covering the tax outgo on the reverse merger, according to one of the sources.

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“Yes, the round has closed with a majority in secondary. The company and the board earlier had discussed that the primary capital raise is largely to account for the merger, since it doesn’t want to dip into its existing cash reserve,” said the source.

Meesho did not respond to ET’s request for comment.

The transaction is believed to have valued the company at around $3.9-4 billion—a slight discount from its peak valuation of $5 billion—the sources said.

“Meesho wants to file for IPO during the second half of the calendar year, but yes it’s contingent on the speed of the Bengaluru tribunal,” another person aware of the timelines said.

Companies like payments firm Pine Labs, which is moving its domicile to India from Singapore, is awaiting final clearance from NCLT Chandigarh, while quick commerce Zepto has already secured its NCLT approval from the Mumbai tribunal.

“US growth funds of some of the active Indian venture capital funds were in discussions to participate in this round,” another person aware of the matter said.

ET had first reported about Meesho’s funding plans in March last year which started as a $250-300 million funding round but got much bigger in size during the following months.

In May, US regulatory filings in the SEC showed about $275 million of share sale at Meesho, but the company never made any announcements.

Road ahead

Meesho’s IPO plan aligns with a growing trend among Indian startups—of all scales—that are in advanced stages of preparation to tap the public market, especially following the wider adoption of new-age firms during 2024.

“They (Meesho) are IPO-ready and have grown about 30-40% in metrics like gross sales, net merchandise volume and revenue,” one of the sources said.

In FY24, Meesho reported a 33% growth in revenue from the previous year to Rs 7,615 crore. The online marketplace, which generates most of its sales from non-metro markets, narrowed its adjusted loss for FY24 to Rs 53 crore, down by 97% from FY23, and said it had achieved operating cash flow positivity. After taxes, its net loss stood at Rs 304 crore, as per regulatory filings in the Registrar of Companies (RoC).

Over the last year, it also introduced Meesho Mall–a brand-focused offering where it charges a commission from listed firms on the marketplace. It doesn't charge any fee from sellers on its main marketplace and generates revenue through advertising and offering logistics services.

Also Read: Meesho launches GenAI-powered voice bot to provide 24x7 customer support

ET had reported last month that Flipkart, too, is planning an IPO in FY26 and has also secured internal approvals to flip its domicile from Singapore to India.

Companies like Groww and PhonePe have completed their migration of parent holding companies to India and are in various stages of advancement for an India IPO.

Vertical omnichannel retailers like FirstCry and Nykaa are among top-tier firms that have listed on bourses over the past few years.

Tax angle

The reverse flip involves significant tax liabilities, which prompted Meesho to raise primary capital in the recently closed financing round to address these costs. Comparable moves by firms like PhonePe saw substantial payouts, with Walmart, its largest investor, paying nearly $1 billion to the Indian government during its relocation. Groww paid around $160 million in taxes.

Startups such as Razorpay--which too is in the middle of flipping its US holding company to India--have also internally discussed tax outgo allocations for the reverse merger. For Zepto, the amount is not yet clear, but the NCLT clearance has mentioned the income-tax department retains the authority to examine any tax implications arising from the merger and take necessary action.