Zomato Raises Rs 8.5k Crore in QIP
Zomato Raises Rs 8.5k Crore
The food delivery giant Zomato is doing wonders on social media. The startup is in news nearly every week. The startup has successfully raised Rs. 8.5k crore through Qualified Institutional Placement(QIP). This initiative is a major success since it’s Initial Public offering (IPO) in 2021. The startup issued 33.65 crore shares at a price of Rs 252.62 per share. This represents a 5% discount from the floor price. The QIP was opened on November 25th and closed on November 28th, 2024. This saw a significant interest from domestic mutual funds.
This heavy amount will help Zomato to strengthen the balance sheet and will also help in expansion plans. The startup can also use this amount to improve the quick commerce and food delivery sectors. A substantial portion of the proceeds, Rs 2,137 crore, has been earmarked for the expansion of Blinkit. This investment will focus on enhancing dark store operations, warehouses, and supply chain infrastructure. To add on, the investment is going to effectively cater to the increasing demand for hyperlocal deliveries.
Zomato Raises Rs 8.5k Crore in QIP market. This significant capital infusion will elevate the company’s cash reserves to approximately Rs 19,300 crore, adding to its existing cash balance of Rs 10,800 crore as of Q2 FY25. Zomato CEO Deepinder Goyal emphasized the importance of bolstering the company’s cash position in the face of a competitive landscape.
Goyal stated, “While the business is now generating cash… we believe that we need to enhance our cash balance given the competitive landscape and the much larger scale of our business today.”
The QIP witnessed substantial participation from domestic mutual fund houses, Some funding houses were Motilal Oswal’s funds emerging as the leading allottees, acquiring 20.81% of the issue. Other prominent participants included ICICI Prudential’s funds (12.78%), HDFC’s funds (8.68%), and Kotak’s mutual funds (5.95%). Analysts view the strategic increase in domestic ownership as a move to mitigate volatilities associated with foreign ownership.. Following the QIP, domestic shareholding in Zomato will be slightly below 50%.
This is also high time when domestic investors are actively looking for opportunities to actively invest in quick commerce sector. Fortunately, Zomato’s fundraising has come at the same time. Investors made additional investments in players like Zepto, which secured $350 million in funding led by Motilal Oswal’s Private Wealth division. Similarly, Swiggy attracted significant participation from domestic investors in its anchor round ahead of its IPO, raising Rs 5,085 crore.
Let us hope that domestic funding increases in Startups like Zomato so that money within the country stays within the country.
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