Zepto’s founders Aadit Palicha and Kaivalya Vohra are in the final stages of raising a INR 1,500 crore (~USD 175 million) structured debt facility, according to multiple reports. The financing round is anchored by Edelweiss Alternative Asset Advisors along with a bunch of domestic family offices and smaller credit funds and is designed to consolidate Indian ownership in the company as it gets ready for its IPO later this year.
The debt facility has a tenure of 3 years and has a minimum interest rate of 16% with an equity linked upside that can push total returns to 18%. Edelweiss has reportedly submitted a binding bid and will underwrite almost half the loan amount while the remaining INR 750 crore will be syndicated among other domestic investors.
Zepto debt raise is being done at a USD 5 billion (~INR 42,602 crore) valuation, same as Zepto’s last equity raise in November 2024 when it raised USD 350 million (~INR 2,980 crore) led by Motilal Oswal Private Wealth.
Zepto Debt Raise Purpose: Strengthening Indian Ownership
The proceeds of the structured debt will be used by Zepto’s founders to buy shares from existing foreign investors and increase domestic shareholding. According to some reports, this is critical for Zepto to meet India’s FDI norms that differentiate between marketplace and inventory led e-commerce models.
India’s FDI rules allow 100% foreign ownership in marketplace models but prohibit foreign control in inventory led businesses, requiring such companies to be Indian Owned and Controlled Companies (IOCCs). To qualify, more than 50% of ownership and control must be with Indian entities.
Currently founders Palicha and Vohra along with the employee stock ownership pool hold about 28% in Zepto. Post the structured debt transaction and a concurrent USD 250 million (~INR 2,130 crore) secondary share sale to domestic private equity firms like Motilal Oswal Financial Services, Zepto’s domestic shareholding is expected to go above 30%. Founders’ individual stake is also expected to increase from 18% to around 20%.This is part of a larger trend where Indian startups, especially those going public, are “reverse flipping” back to India. Zepto recently got NCLT approval to merge its Singapore based parent company Kiranakart with its Indian subsidiary Kiranakart Technologies which has been renamed to Zepto Pvt Ltd.
Quick Commerce in the Spotlight
Zepto’s aggressive moves come at a time when the quick commerce space is getting competitive. The Mumbai-based company recently said it is nearing an annualized Gross Order Value (GOV) of USD 4 billion (~INR 34,081 crore), up 300% year-on-year and 30% quarter-on-quarter since January 2025. Palicha also mentioned 50% reduction in EBITDA losses (excluding ESOP costs) and operational cash burn in the last quarter and plans to break even soon.
Rivals are not idle. Blinkit, backed by Zomato, clocked a GOV of USD 3.6 billion (~INR 30,673 crore) in the quarter ended 31 December 2024 while Instamart of Swiggy posted a USD 1.8 billion (~INR 15,336 crore) run rate. But the space is still very cash intensive with monthly burn rates across players ranging from INR 1,300-1,500 crore.
Interestingly, Zomato’s board recently capped foreign ownership at 49.5% to give Blinkit more operational flexibility — a precedent that highlights the regulatory importance of Indian ownership in inventory-led models.
A Rare Structured Deal for New-Age Tech
Structured promoter financing is still a rare phenomenon in India’s startup space, especially for new-age tech companies with high burn rates. Historically, similar debt arrangements have been attempted by companies like Byju’s, PharmEasy and Oyo — with mixed results. Byju’s defaulted and went into bankruptcy, while PharmEasy saw a 90% haircut in its valuation last year.
Unlike typical venture debt, Zepto’s deal stands out for its scale, valuation stability and embedded equity upside — characteristics more common in matured, listed companies.
Industry observers call this a “classic promoter financing” model, combining high-yield debt with future equity-linked returns. It shows investor confidence in Zepto’s fundamentals and the founders’ intent to position the company strategically for domestic regulatory compliance and investor appeal before its public listing.
Looking Ahead
Zepto is expected to file its IPO papers by mid-2025. If it achieves its ownership restructuring and profitability targets, it will be one of India’s first large quick-commerce IPOs, setting a template for other players in the space. Where operational discipline and market share are the two pillars of long-term success, Zepto’s founders are making a big call. For more details related to IPO GMP, SEBI IPO Approval, and Live Subscription stay tuned to IPO Central.