Motilal Oswal Co-Founders Make Bold Move: Acquire $100 Million in Zepto Shares!

In a significant move within the quick commerce industry, Motilal Oswal and Raamdeo Agrawal, co-founders of Motilal Oswal Financial Services, have each invested $50 million in Zepto, a rising player in the sector. This combined investment of $100 million is poised to bolster Zepto’s domestic ownership, which aims to reach 50% as it prepares for its upcoming initial public offering (IPO).

Zepto’s Strategic Shift Before IPO

This new investment comes at a crucial time for Zepto, which is strategically increasing its domestic shareholding. Following this secondary transaction, sources indicate that the company’s local ownership will rise to 35%. This move is significant as it enhances decision-making flexibility, although achieving a 50% domestic ownership is not a regulatory requirement.

Future Funding Plans

In addition to the recent investment from Oswal and Agrawal, Zepto is actively pursuing a $250 million secondary funding round with Hero FinCorp and Edelweiss. The shares will be acquired from a pool of international investors, including Lachy Groom and Rocket Internet, with the transaction valuing the company at $5 billion, consistent with its previous assessments.

Key Points:
- Co-founders’ Investment: Oswal and Agrawal each invested $50 million.
- Domestic Ownership Target: Zepto aims for 50% ownership domestically.
- Funding Round: Seeking $250 million from Hero FinCorp and Edelweiss.

Recent Market Dynamics

Last November, Zepto successfully raised $350 million from domestic investors at the same valuation, with participation from notable figures such as Abhishek Bachchan and Sachin Tendulkar. According to insiders, maintaining the valuation encourages local investors to engage, enhancing the company’s market position.

Industry Competitors and Trends

The quick commerce landscape is evolving, with Eternal, the parent company of Blinkit, recently achieving Indian ownership status. This transition allows Blinkit to manage its inventory more effectively in the competitive space. Akshant Goyal, CFO of Eternal, emphasized the importance of this strategic move in a shareholder letter, stating it would bolster business resilience.

Conversely, Swiggy, which operates Instamart, has no immediate plans to transform into an Indian Owned and Controlled Company (IOCC). Rahul Bothra, Swiggy’s CFO, noted that while maintaining inventory can be advantageous, it also presents challenges regarding financial management.

Zepto’s Growth Trajectory

Since its entry into the market in 2021, Zepto has been aggressively raising funds, with approximately $1.35 billion secured in 2024 alone. The funds are primarily directed towards expanding Zepto’s dark store network and enhancing market share.

Currently, the competitive landscape sees Blinkit leading with 1.65 to 1.75 million daily orders, followed closely by Zepto with 1.45 to 1.55 million orders, while Instamart records around 1.05 to 1.15 million orders per day.

As Zepto continues to grow and adapt to market demands, its recent funding and strategic focus on domestic ownership position it well for future challenges and opportunities in the quick commerce sector. The ongoing investments and market maneuvers highlight the dynamic nature of this rapidly evolving industry.