People with knowledge of the confidential talks, who asked not to be named because the discussions were private, said Zepto Ltd.'s valuation was cut by 68% during IPO presentations last month, prompting the Indian quick-commerce company to postpone its market debut.
SBI Funds Management Ltd., which runs India's biggest mutual fund, joined other local investors in offering about 17-18 rupees per share for Zepto's anchor allocation, the people said. That assigned Zepto a value of roughly $2.3 billion. Neither Zepto nor SBI Funds Management replied to requests for comment.
By contrast, UnlistedZone.com, which operates a marketplace for private-company shares, logged Zepto trades at 55 rupees apiece in the unofficial market in March. That valuation, about $7.2 billion, was a bit more than Zepto's most recent private financing round in October. At the time, sentiment had been lifted by hopes for a strong debut and heavy institutional interest.
The valuation gap eventually caused Zepto to postpone what had been one of the country's most anticipated listings of the year.
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Zepto's private shares have traded at a range of prices over recent months. Umesh Chandra Paliwal, co-founder of UnlistedZone, said the October financing priced Zepto's shares at roughly 52 rupees each. He added that they later dropped to 22 rupees in July and have since climbed back to around 27 rupees.
Zepto's draft prospectus also disclosed that, ahead of the listing process, a number of well-known investors acquired shares at 40.13 rupees each. Among them were Motilal Oswal and Raamdeo Agrawal, founders of Motilal Oswal Financial Services Ltd.; Abhay Soi, chairman of Max Healthcare Institute Ltd.; Varun Berry, former managing director of Britannia Industries Ltd.; and actor Abhishek Bachchan.
The back-and-forth in Zepto's share price underscores how much uncertainty can surround private-market valuations before an IPO. A price of 55 rupees in March, followed by bids of 17-18 rupees in the IPO process, left Zepto with a difficult choice: accept a much lower public valuation or wait for more favorable conditions. The company chose to wait.
Zepto operates in India's crowded quick-commerce space, delivering groceries and daily essentials in minutes. Its growth has attracted private capital, but it remains a loss-making company, which makes it sensitive to shifts in investor sentiment. The 68% gap between the valuation implied by March private-market trades and the IPO bids shows how much valuation depends on whether investors focus on growth potential or near-term losses. Geopolitical concerns have added to those worries, pushing even sophisticated buyers to demand lower prices.
"With geopolitical concerns weighing on market sentiment, investors have turned skeptical of valuations, especially loss-making businesses such as Zepto," Paliwal said.
Zepto intends to wait several quarters, selling shares privately before it reconsiders a public listing.
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