Zepto, an online grocer, is in talks with current stockholders to sell up to $250 million of their equity, with the goal of increasing Indian investor ownership before the startup goes public later this year.
The Bangalore-based startup is in negotiations with the private equity divisions of Motilal Oswal Financial Services Ltd. and Edelweiss Financial Services Ltd. to purchase shares in the secondary sale, according to people familiar with the situation who asked not to be named in order to discuss sensitive topics.
Employees and some current investors will be able to sell their shares for cash during this process, but Zepto won't be raising any additional funds. The company expects to close the transactions at a valuation of slightly more than $5 billion, which is the same as its most recent funding round late last year.
The move is part of Zepto's strategy to increase Indian investor shareholdings ahead of an initial public offering of shares later this year or early 2026, according to the sources. Indian shareholders currently own approximately 33% of Zepto's capital, with founders Aadit Palicha and Kaivalya Vohra owning roughly one-fifth. According to one of the participants, the goal is to increase the overall proportion to around 50%.
Secondary stock sales have historically been controversial because they allow managers and other employees to profit before an IPO or sale, potentially demotivating them to build the business. More recently, however, such sales have become a way to reward employees and boost morale while also allowing investors to withdraw funds.
Zepto competes in India's highly competitive and low-margin grocery delivery market. Rivals in the market include e-commerce giant Amazon.com Inc.'s India unit, as well as domestic competitors such as SoftBank Group Corp.-backed Swiggy Ltd., publicly traded Zomato Ltd., and Tata Group's BigBasket.
Palicha and Vohra, 22, were childhood friends who dropped out of Stanford University's computer science program and returned to India in 2021 to build the startup.
