Meesho earmarks Rs 480 crore from ensuing IPO proceeds for payment of salaries of AI, tech teams

The disclosure has sparked social media chatter over whether such utilisation from IPO funds (on personnel salary spends) should be worrying or signals long-term bets on tech talent.

E-commerce company Meesho plans to use Rs 480 crore from the public offer proceeds towards payment of salaries of AI and technology teams, according to draft IPO papers.

The disclosure has sparked social media chatter over whether such utilisation from IPO funds (on personnel salary spends) should be worrying or signals long-term bets on tech talent. SoftBank-backed e-commerce firm is aiming to raise Rs 5,421 crore through its Initial Public Offering (IPO), which opens for subscription on December 3.

The e-commerce firm will make its debut on the stock market on December 12. The Bengaluru-based company’s maiden public offering will comprise a fresh issue of shares worth Rs 4,250 crore, along with an Offer For Sale (OFS) of 10.55 crore shares valued at Rs 1,171 crore at the upper band, taking the total issue size to Rs 5,421 crore.

Giving details of the proposed utilisation of IPO proceeds, the company disclosed that Rs 480 crore is earmarked for ”payment of salaries of our existing and replacement hires for the Machine Learning and AI and technology teams for AI and technology development undertaken by Meesho Technologies Private Limited, our subsidiary”. It further said Rs 1,390 crore would be set aside for investment in cloud infrastructure in subsidiary MTPL, and another Rs 1,020 crore for investment towards marketing and brand initiatives (in MTPL).

It also listed inorganic growth through acquisitions and other strategic initiatives and general corporate purposes as activities proposed to be funded from the net proceeds. The cumulative amount to be utilised towards inorganic growth through acquisitions and other strategic initiatives and general corporate purposes shall not exceed 35 per cent of the gross proceeds.

Further, the amount utilised for the objective of funding inorganic growth through acquisition and other strategic initiatives shall not exceed 10 per cent of the amount raised by the company, it said. The amount to be spent towards funding inorganic growth through acquisitions and other strategic initiatives and general corporate purposes will be finalised on the determination of the offer price and updated in the prospectus prior to filing with the Registrar of Companies, according to the document.