In a significant move to boost its domestic ownership and position itself for a successful public listing, Zepto, the quick commerce giant led by Aadit Palicha, is reportedly in talks with Edelweiss Alternative Asset, several domestic family offices, and smaller credit funds. According to a report by Economic Times, Zepto is seeking to secure around Rs 1,500 crore (over $175 million) in structured debt, a deal that could play a crucial role in the company’s upcoming Initial Public Offering (IPO).
Aiming for Greater Domestic Control
The primary objective of this debt deal is to help Zepto buy back shares from its existing foreign investors, thereby increasing domestic ownership before it goes public. In a market where foreign investors often hold substantial stakes in tech startups, this move is strategically designed to align the company’s shareholder structure with the preferences of Indian regulators and investors.
High-Interest Debt and Equity Upside
Edelweiss Alternative Asset, a prominent player in India’s asset management space, has reportedly submitted a binding bid for this structured loan. The loan carries a minimum interest rate of 16%, with an additional equity-linked upside. This means that while the interest rate will provide immediate returns for lenders, the equity-linked component could offer an enhanced return of up to 18% in total. This structure has the potential to attract a wide range of investors, especially those seeking higher returns in the rapidly growing Indian tech space.
Zepto’s Growth Trajectory
Zepto, which was founded in 2021 by Aadit Palicha and Kaivalya Vohra, has quickly established itself as a leader in the fast-paced quick commerce sector. The company promises to deliver groceries in as little as 10 minutes, a proposition that has resonated with urban consumers. Since its launch, Zepto has raised significant capital, attracting several high-profile investors. The company’s growth has been fueled by its ability to scale rapidly and offer convenience that traditional grocery delivery services struggle to match.
As Zepto gears up for its IPO, the planned debt raise could serve as a strategic move to reduce foreign ownership, a requirement often considered favorably by Indian regulators for local businesses aiming to list on domestic stock exchanges. The structured debt deal could also provide the company with the liquidity necessary to enhance its market positioning in preparation for the public offering.
What This Means for Zepto’s IPO
An IPO is a pivotal step for any startup, and Zepto’s decision to structure its debt in this way indicates that the company is taking deliberate steps to ensure a smooth transition into the public markets. The equity-linked upside on the debt could incentivize investors to lend more, while the reduced foreign ownership may help Zepto gain favor with Indian investors, who may be more inclined to support a company with stronger domestic ties.
Zepto’s IPO, which is expected to be one of the most closely watched in the Indian tech space, could set a precedent for other emerging startups in the country. The structured debt deal is a sign that Zepto is keen to balance growth with local investor interests in its next stage of evolution.
Conclusion
Zepto’s move to secure Rs 1,500 crore in structured debt as it prepares for its IPO highlights its focus on strengthening domestic ownership and appealing to Indian investors. The deal, with its high-interest rate and potential for enhanced returns, could prove to be an attractive proposition for creditors while helping Zepto position itself for success in the public market. As the quick commerce sector continues to evolve, all eyes will be on Zepto as it seeks to solidify its status as one of India’s leading tech startups.
Last Updated on: Monday, April 28, 2025 9:35 pm by Anushka sirohi | Published by: Anushka sirohi on Monday, April 28, 2025 9:35 pm | News Categories: News
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