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Zomato has raised $1 billion through a so-called qualified institutional placement, completing its first major fundraising since its 2021 IPO.
The $30 billion food delivery and express commerce giant, which leads these two categories, issued nearly 336.5 million shares at 252.62 rupees each ($3), according to a stock exchange filing on Friday.
The IPO, which opened on November 25 and closed on November 28, witnessed strong participation from leading local investment funds. Motilal Oswal emerged as the largest investor, with its group of funds accounting for 20.81% of the issue. ICICI Prudential funds got 12.78%, while HDFC and Kotak funds got 8.68% and 5.95%, respectively.
The $1 billion fundraising strategically transforms Zomato’s status into a ‘local’ company by pushing foreign ownership below 50%. This would allow its express trade unit Plinkett to adopt an inventory-based model, currently limited to local companies, allowing direct control of products and warehousing.
The timing of the capital raise is also strategic, coming just weeks after rival Swiggy’s $1.35 billion IPO earlier this month. Zepto, another leading flash commerce startup, raised $350 million earlier this month in a deal brokered by Motilal Oswal.
Swiggy shares fell 4.1% on Friday, taking this week’s total to 12.8%. Shares of Zomato, offered to investors participating in QIP at a 5% discount, fell nearly 1% on Friday, but remained up 127.7% year-to-date.
Zomato co-founder and CEO Deepinder Goyal said last month that the company, which already has cash reserves worth $1.3 billion, is seeking additional funds to maintain competitive parity.
The company, which recently announced its second consecutive quarterly earnings, is leading the flash commerce market in India with Blinkit, competing against well-funded rivals like Swiggy, Zepto, and BigBasket in a segment expected to generate more than $6.5 billion in annual run rate revenue. .
“We see the quick commerce industry going through a phase of increased competition over the next six to 12 months. Speed commerce players are looking to raise capital or have already raised it. Four new names including Flipkart, Reliance and BigBasket are… And Amazon is looking to enter the express commerce space.
“In this space, first mover advantage is important, and given that TAM is at c. 30 million households (330 million households in India), we believe it makes sense that market leader Zomato would want to maintain its leading 40% share. “
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