Fidelity Adjusts Meesho Valuation Amid Market Fluctuations
Fidelity, a prominent U.S. asset manager, has made significant adjustments to the valuation of its investment in Indian social commerce startup Meesho, marking a decrease of 33.6% since its original investment. The revised valuation now stands at $3.25 billion, although Meesho reports its valuation to be $3.5 billion when adjusted for outstanding shares.
Valuation Adjustment Details
The asset manager valued its stake in Meesho at $27.8 million by the end of December, marking a decline from the $41.9 million invested in the second half of 2022 through a specific mutual fund unit. This markdown was disclosed in Fidelity’s monthly report released on Monday.
Factors Influencing Valuation
Fidelity had previously marked down Meesho’s valuation to $4.1 billion in October, a significant decrease from its previous valuation of $4.9 billion. The valuation adjustment follows a secondary sale transaction where early investor Venture Highway sold some equity to WestBridge Capital, valuing Meesho at $3.5 billion. This transaction likely influenced Fidelity’s reassessment.
Response from Meesho
In response to inquiries, a spokesperson from Meesho stated that the valuation is assessed at $3.5 billion based on various factors, including the number of shares held and the current number of outstanding fully diluted shares. The expansion of the ESOP pool may have contributed to this valuation shift.
Other Adjustments by Fidelity
While Fidelity marked down its investment in Meesho, it has slightly increased the value of its holdings in Reddit, Gupshup, and X, according to its monthly disclosure. However, these startups remain below their original investment levels.
Meesho’s Growth and Expansion Plans
Despite the valuation adjustments, Meesho continues to experience rapid growth and expansion. With backers such as Meta, Peak XV, Prosus Ventures, B Capital, and SoftBank, Meesho operates as a social commerce startup with a current GMV run rate exceeding $5 billion. The company is diversifying its offerings by planning to build a financial services platform and scale its grocery delivery business.
Targeting Underserved Markets
Meesho’s success lies in its strategic focus on Tier 2 and below cities, where over 50% of its sales originate. By effectively targeting this demographic, Meesho has carved a niche market largely overlooked by major e-commerce players like Flipkart and Amazon. This prioritization of small towns and value-conscious customers has proven to be a successful strategy for Meesho, according to industry analysts.
