Meesho Cofounders Exercise ESOPs Ahead Of IPO

In a strategic move ahead of Meesho’s highly-anticipated initial public offering (IPO), its cofounders Vidit Aatrey and Sanjeev Barnwal have exercised a significant number of employee stock options.

Meesho’s board passed a resolution on March 31 to allot 20,65,211 equity shares at a face value of INR 1 each to Aatrey and 6,59,323 shares to Barnwal, as per its regulatory filings accessed by Inc42.

The cofounders were allotted the stock options under Fashnear Technologies Private Limited Employee Stock Option Plan, 2024 (ESOP 2024 Plan). Upon the completion of the vesting period, they exercised their right to convert them into equity shares.

Responding to Inc42’s queries on the development, Meesho said that the shares are not new grants but part of the pre-existing ESOP pool. However, it did not disclose the value of these equity shares.

The development was first reported by Entrackr.

It must be noted that Meesho announced an ESOP buyback programme worth INR 200 Cr  (about $25 Mn) last year, its largest till date, benefiting nearly 1,700 former and current employees. Prior to that, the ecommerce unicorn bought back shares worth $11.5 Mn via three other buyback programmes.

Founded in 2015 by Aatrey and Barnwal, Meesho started as a social ecommerce startup. However, it transitioned to a marketplace model in 2022 to take on heavyweights like Flipkart and Amazon.

While Flipkart and Amazon are more popular in Tier-I cities, Meesho targets customers in Tier-II, III and beyond cities with unbranded products like cosmetics and clothing. The startup earns more than 80% of its revenue from these cities. 

Interestingly, Meesho does not charge commission fees on its platform and instead relies on advertising and marketing income from sellers. 

It narrowed its net loss 82% year-on-year (YoY) to INR 304.9 Cr in FY24, while operating revenue grew about 33% YoY to INR 7,614.9 Cr. 

Meesho’s Public Listing Plans 

Meesho is among the growing list of new-age tech companies looking to ride the startup IPO wave. In its H1 FY25 disclosures, Dutch investor Prosus said last year that Meesho was among the potential IPO candidates from its Indian portfolio, along with BlueStone, PayU and Urban Company.

Meesho is planning to raise $1 Bn through its IPO. As part of its public listing plans, the ecommerce unicorn roped in Morgan Stanley, Kotak Mahindra Capital and Citi as advisers for its IPO last month.

Ahead of its IPO, the ecommerce giant also pocketed $250 Mn to $270 Mn funding from the likes of Tiger Global, Think Investments, and Mars Growth Capital.

Startup IPOs lit up Dalal Street last year, with 13 new-age tech companies going public and raising a whopping INR 29,000+ Cr via their IPOs. This IPO mania is expected to continue this year as well, with more than 20 startups, including Physics Wallah, Ola Consumer, boAt, BlueStone, Ather Energy, ArisInfra, and IndiQube, expected to go public.