Fidelity marks-down value of its Meesho investment by 10%

In a global economic scenario where tech unicorn valuations are bearing the axe on a daily basis, it is now Meesho, the Indian ecommerce marketplace, which is seeing an internal valuation correction by one of its key investors. Fidelity Investments, which led Meesho’s last $570Mn round, has cut down the valuation of its stake by 10%, now valuing the company at $4.4Bn.

The cut however, isn’t as massive as seen by several other tech companies, since Meesho’s valuation post its last fundraising round was about $4.9Bn. Meesho is joining a growing list of over-valued Indian tech upstarts, which saw a massive influx of liquidity in the 2020-21 period, but have since been made to realise the value of profits, resulting in valuation markdowns. The list consists of names such as Swiggy, Ola, Byju’s among several others.

This mark down comes at a time when the global economy has seen several weak spots in its post-COVID recovery timeline. Tech firms have been specially hit, both private and publicly traded. While more-established global tech players have resorted to mass layoffs to balance out losses, India’s investment heavy, mostly-loss making unicorns and other heavily funded startups, are bearing a brunt of this via a decrement in investor cash and valuation mark downs.

Important to note though, that these mark downs are mostly internal. It is Fidelity Investments’ (or others in other mark down cases) own assessment of its investee company and the value its stake. Real, market valuations of these firms continue to remain at their previously raised rounds and will go up/down based on next investments or a possible IPO.

Fidelity holds shares in Meesho via multiple funds, such as Fidelity Central Investment Portfolio and Variable Insurance Products IV, according to SEC filings. In the first fund, it had pegged the value of its 33,863 shares in Meesho at $2.59 million as of March 31, 2022. That fell by about 9.7% to $2.34 million, as of March 31, 2023. In the second fund, it had pegged the value of its 17,100 shares at $1.31 million on Dec. 31, 2022. That also fell 11% to $1.18 million as of March 31, 2023.

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