Zepto in Talks for $250 Million Secondary Sale Ahead of Planned IPO

Online grocery delivery startup Zepto is engaging in discussions for a secondary share sale worth up to $250 million. This initiative aims to enhance the ownership of Indian investors before the company proceeds with its planned initial public offering (IPO) later this year.

Involvement of Key Investors

The private equity divisions of Motilal Oswal Financial Services Ltd. and Edelweiss Financial Services Ltd. are in negotiations with Zepto to acquire shares in this secondary sale. These discussions remain confidential, according to sources familiar with the matter.

Unlike a primary funding round, Zepto will not be raising fresh capital. Instead, this transaction will enable employees and existing investors to sell their shares for liquidity. The sale is anticipated to take place at a valuation exceeding $5 billion, aligning with the valuation from its last funding round in late 2023.

Strategic Plan to Increase Indian Shareholding

The primary goal behind this secondary sale is to boost the percentage of Indian investors holding stakes in Zepto before its IPO, expected either in late 2025 or early 2026. Currently, Indian shareholders account for about 33% of Zepto’s cap table. The company aims to increase this proportion to around 50%. The startup’s co-founders, Aadit Palicha and Kaivalya Vohra, collectively hold approximately 20% of the company.

Neither Zepto nor Motilal Oswal has commented on the ongoing discussions, while Edelweiss has declined to make a statement regarding the matter.

The Role of Secondary Share Sales

Historically, secondary share sales have been met with skepticism as they allow executives and employees to liquidate their holdings before an IPO or a company sale. Critics argue that such transactions may reduce the motivation of employees to continue building the business. However, in recent years, secondary sales have gained acceptance as a tool to reward employees, boost morale, and enable early investors to partially exit before a public listing.

Zepto’s Position in the Competitive Grocery Delivery Market

Zepto operates in India’s highly competitive and low-margin online grocery delivery sector. The company competes with major players, including Amazon India, Swiggy (backed by SoftBank Group Corp.), Zomato (a publicly traded firm), and BigBasket, which is owned by the Tata Group.

Since its inception, Zepto has rapidly expanded its footprint across India, offering ultra-fast grocery delivery services. The company has continuously enhanced its logistics and supply chain networks to stay ahead in the dynamic quick-commerce industry.

Founders’ Journey from Stanford to Zepto

Zepto was founded in 2021 by Aadit Palicha and Kaivalya Vohra, childhood friends who dropped out of Stanford University’s computer science program to return to India and build their startup. Their venture into the grocery delivery business started during the pandemic, capitalizing on the rising demand for quick-commerce services.

Under their leadership, Zepto has scaled up rapidly, attracting top-tier investors and achieving a multi-billion-dollar valuation in just a few years. The upcoming secondary sale is a strategic step to ensure a smooth transition to a public listing while strengthening its local investor base.

Looking Ahead: Zepto’s IPO Aspirations

With its eyes set on an IPO, Zepto’s decision to increase Indian investor participation aligns with regulatory and market preferences. By diversifying its ownership structure and allowing early stakeholders to cash out, the company is strategically positioning itself for a successful public listing.

The online grocery delivery space in India is expected to grow exponentially, driven by increasing digital adoption and a shift in consumer behavior toward convenience-driven shopping. As Zepto moves closer to its IPO, its ability to navigate competitive pressures and maintain rapid growth will be key determinants of its future success.