Flipkart's merger deal with Zepto crashes: What went wrong?
Negotiations for a potential merger between e-commerce giant Flipkart and quick commerce startup Zepto have reportedly collapsed. Zepto, a significant player in the rapidly growing quick commerce sector, has decided to pursue financial backing instead of a strategic sale. According to the Economic Times, the deal fell through due to Flipkart's insistence on acquiring a majority stake in the quick commerce company. Flipkart reportedly made an offer to Zepto valuing it at under $2 billion.
Zepto turns to private equity funds for financial backing
Following the collapse of merger talks with Flipkart, Zepto is now seeking financial support from various private equity (PE) funds and existing investors. The startup is projected to reach a valuation of nearly $2.5 billion in its new funding round, almost double its previous valuation. An ET source close to the negotiations disclosed that discussions were terminated as Flipkart was not interested in a deal that would leave it with a minority stake.
Zepto CEO says no need for large fundraise
Zepto's CEO Aadit Palicha has stated that the company is "not open to strategic investors today." "We have almost all the capital from the previous fundraise still in the bank while the company is close to EBITDA positive." "With that context, in any future fundraise, we would have no intention or need to raise an amount as large as $500 million," Palicha said.
Zepto receives commitments from existing backers; seeks lead investor
As per ET, Zepto has received commitments from existing backers like Glade Brook Capital and Nexus Venture Partners among others. However, the company is still seeking an external investor to lead the financing round. Zepto has indicated to potential investors that it may stretch the round size to around $500 million. Internal commitments from current backers are for $200 million.
