Two of India’s leading startups, Meesho and Pine Labs, have seen their valuations cut by Fidelity, one of their investors, as per the latest regulatory filings with the US Securities and Exchange Commission (SEC).
Fidelity, which manages funds that invest in both public and private companies, has reduced the fair value of Meesho, an e-commerce platform, from $5 billion to $4.1 billion as of October 31, 2023. This represents a 18% drop in the valuation of the company, which was last valued at $4.9 billion after raising $570 million in 2021.
Similarly, Fidelity has lowered the fair value of Pine Labs, a fintech firm that offers payment solutions to merchants, from $4.7 billion to $3 billion as of October 31, 2023. This implies a 36% decrease in the valuation of the company, which was valued at over $5 billion after raising $150 million in 2022.
The reasons behind the valuation markdowns are not clear, but they could reflect the changes in the market conditions and the performance of their public market peers. Fidelity periodically reviews the valuation of its portfolio companies based on various factors, such as financial results, competitive landscape, industry trends, and exit opportunities.
Both Meesho and Pine Labs have reported strong growth in their revenue and reduction in their losses for the financial year ended March 2023. Meesho’s operating revenue grew 77% to Rs 5,735 crore, while its net loss reduced 48% to Rs 1,675 crore. Pine Labs’ total revenue increased 56% to Rs 1,588 crore, while its net loss narrowed to Rs 227 crore.
Meesho and Pine Labs are among the most prominent startups in India, with backing from global investors such as Facebook, SoftBank, Sequoia Capital, and PayPal. Meesho enables small businesses and individuals to sell products online through social media platforms, while Pine Labs provides point-of-sale devices, QR code payments, and credit solutions to merchants.
Fidelity is not the only investor that has marked down the valuation of its portfolio companies in India. Invesco, another US-based investment firm, has also cut the valuation of Pine Labs to $3.9 billion as of October 31, 2023. Moreover, BlackRock, the world’s largest asset manager, has slashed the valuation of Byju’s, India’s most valuable startup, by 95% to $1 billion as of December 31, 2023.
The valuation markdowns by these investors indicate that the private market valuations of some of the Indian startups may not be sustainable or realistic, and they may face challenges in raising funds or going public at their desired valuations in the future.
Comments