Fidelity marks up SoftBank-backed Meesho's fair value by 14% after markdown in April

Vidit Aatrey, co-founder, Meesho

US-based Asset Management Company (AMC) Fidelity Investments has marked up the fair value of SoftBank-backed e-commerce platform Meesho by a little over 14 percent as of July, its latest filings showed.

Fidelity Investments, which invested close to $42 million in Meesho in September 2021, has marked up the fair value of its investment in the e-commerce platform to $43.24 million as of July 31, the filings showed.

As of April, Fidelity had slashed the fair value of its investment in Meesho to $37.84 million, Moneycontrol had reported.

The slight markup has effectively valued Meesho at slightly over $5 billion. Meesho's previous valuation was $4.9 billion when it raised $570 million during its Series F funding round from investors like Fidelity and B Capital.

It is important to note that these adjustments to fair values are typically based on AMC's internal assessment of the macro and microenvironment. They do not necessarily indicate a permanent markup or markdown in the startup's overall valuation.

Meesho didn't immediately reply to Moneycontrol's queries.

Meesho's markup, albeit marginal, comes a few weeks after the low-price e-commerce platform said that it turned profitable on a profit-after-tax (PAT) basis in July.  Dhiresh Bansal, the company's CFO told Moneycontrol earlier this month that the PAT was a low single-digit (in Rs crore), but did not disclose the exact number. He further said that there was a long way to go for the company to establish a profitability trend.

Even as the performance is likely to hold steady for the remaining months this year, there are still chances Meesho does not end FY24 in the black, largely because the monthly PAT numbers may not total to a large amount given Meesho's scale, Bansal had said.

In FY22, Meesho recorded losses of around Rs 3,251 crore on a revenue of nearly Rs 3,232 crore. Its financial health had improved in FY23, Bansal claimed. Meesho’s revenues grew by around 60 percent on a YoY basis while its losses narrowed by 50 percent in FY23, when compared with FY22, Bansal said. To be sure, the company’s accounting books are still being audited and the final numbers could be different.

Meesho still has $400 million in its bank accounts and is looking at smaller players that it can acquire. Meesho had earlier said that if the company turns profitable, it will consider an initial public offering (IPO) in FY24 but Bansal said that goal was still at least 12 months away.

"While we are slightly earlier than our expectation in terms of reaching consolidated profit, we still want to have a long enough track record of profitability and growth before we go to the public markets," Bansal said.

Meesho's monthly cash burn was down 90 percent to around $4 million now, Moneycontrol had reported earlier.

Earlier this week, Moneycontrol also reported that Baron Capital, another US-based AMC had marked up the fair value of fintech unicorn Pine Labs and food tech decacorn Swiggy, after marking down the companies in previous quarters.