Zomato raises $1 billion in its first major fundraising since listing in 2021

Zomato has raised $1 billion in a so-called qualified institutional placement, completing its first major fundraising since its 2021 IPO.

Friday’s stock exchange filing showed the $30 billion food delivery and fast-trading giant, which leads in each categories, issued about 336.5 million shares at 252.62 kilos ($3) each.

The placement, which began on November 25 and ended on November 28, enjoyed large participation from leading domestic investment funds. The largest investor turned out to be Motilal Oswal, whose family of funds covered 20.81% of the difficulty. ICICI Prudential Funds secured 12.78%, while HDFC and Kotak Funds secured 8.68% and 5.95% respectively.

The timing of the capital raise can be strategic, coming just weeks after rival Swiggy’s $1.35 billion initial public offering earlier this month. Zepto, one other leading fast trading startup, earlier this month secured $350 million in a deal brokered by Motilal Oswal.

Swiggy shares fell 4.1% on Friday, limiting the general gain this week to 12.8%. Zomato shares, offered to investors participating in the QIP at a 5% discount, fell about 1% on Friday but are up 127.7% since the start of the 12 months.

Zomato co-founder and CEO Deepinder Goyal said last month that the corporate, which already has money reserves of $1.3 billion, was searching for additional funds to take care of competitive parity.

The company, which recently reported its second straight quarterly profit, is a frontrunner in India’s fast trading market via Blinkit, competing with well-funded rivals corresponding to Swiggy, Zepto and BigBasket in a sector expected to generate greater than $6.5 billion in annual revenue .

“We see that the fast trading industry will go through a phase of increased competition over the next 6-12 months. Companies operating on the fast trading market are looking for capital or have already obtained it. Four new names including Flipkart, Reliance, BigBasket and Amazon are looking to enter the fast trading space,” Bank of America analysts said in a note.

“The first mover advantage is what matters in this space, and given that the TAM is around 30 million households (330 million households in India), we believe it is logical that market leader Zomato would want to maintain its leading position c. 40% share.”