Indian food delivery app Zomato has raised $1 billion from institutional investors, completing its first major funding since its 2021 IPO.
The food delivery and quick commerce giant issued about 336.5 million shares at a price of 252.62 ₹ ($3) per share in a qualified institutional offering, according to a stock exchange filing on Friday.
This funding saw active participation from major Indian investment trusts. Motilal Oswal emerged as the largest investor with his fund family holding 20.81% of the outstanding shares. ICICI Prudential fund secured 12.78% while HDFC and Kotak funds got 8.68% and 5.95% respectively.
The $1 billion funding will strategically shift Zomato's status to a “domestic” company by pushing Zomato's foreign ownership below 50%. This will allow Brinkit, the company's quick commerce division, to adopt an inventory-driven model (currently limited to domestic companies), giving it direct control over product and warehousing.
The timing of the funding is also strategic, coming just weeks after rival Swiggy's $1.35 billion IPO earlier this month. Zepto, another major quick commerce startup, secured $350 million this month in a deal brokered by Motilal Oswal.
Swiggy's stock price fell 4.1% on Friday, bringing the week's overall gain to 12.8%. Zomato shares, which were offered at a 5% discount to investors participating in the stock issue, fell about 1% on Friday but remain up 127.7% year-to-date. Zomato's market capitalization is approximately $30 billion.
Zomato co-founder and CEO Deepinder Goyal said last month that the company already has $1.3 billion in cash reserves and is looking to raise additional funds to remain competitive. He said that
The company, which recently reported its second consecutive quarterly profit, leads India's quick commerce market with Blinkit, competing with deep-pocketed rivals like Swiggy, Zepto and BigBasket in a field expected to generate more than $6.5 billion in annual run-rate revenue. are competing.
“The quick commerce industry is expected to undergo a competitive phase in the next 6-12 months. Quick commerce incumbents are considering or have already raised funding. Flipkart, Reliance, BigBasket “Four new companies, including Amazon, are considering entering the quick commerce space,” Bank of America analysts wrote in a note to clients.
“First mover advantage is important in this space, and assuming a TAM of c, Zomato, the market leader with 30 million households (330 million households in India), wants to maintain its top position with 30 million households. I think it's natural to think so.The market share is 40%.