Zepto plans $250 million share sale before IPO

Zepto is considering a secondary sale of shares worth up to $250 million as it prepares for an initial public offering (IPO). The goal of this sale is to increase the ownership of Indian investors in the company. Currently, Indian investors hold about 33% of Zepto, and the company hopes to raise that to around 50%. The secondary sale involves private equity firms Motilal Oswal and Edelweiss. These firms are in talks to buy shares from existing shareholders, including employees. However, Zepto will not raise new capital in this transaction. The company aims to execute the sales at a valuation of over $5 billion, matching its most recent funding round in late 2023. Zepto's founders, Aadit Palicha and Kaivalya Vohra, both 22 years old, started the company in 2021 after dropping out of Stanford University. The startup operates in India's highly competitive grocery delivery market, facing stiff competition from established players like Amazon and local companies such as Swiggy and Zomato. Secondary stock sales have been a topic of debate. Critics argue they allow key staff to cash out before an IPO, which could hurt the company's growth. However, others see them as a way to reward employees and boost morale. Several requests for comments from Zepto and Motilal Oswal went unanswered, and Edelweiss declined to comment.