Zomato, the popular Indian food delivery app, recently completed a major fundraise, raising $1 billion from institutional investors. This fundraise marks the company’s first significant capital raise since its IPO in 2021.
During the fundraise, Zomato issued approximately 336.5 million shares priced at ₹252.62 each ($3) in a qualified institutional placement. The strong participation from leading Indian mutual funds was evident, with Motilal Oswal emerging as the largest investor, acquiring 20.81% of the shares. ICICI Prudential, HDFC, and Kotak funds also secured significant portions of the shares, further solidifying the interest in Zomato.
One notable outcome of the $1 billion fundraise is that it strategically shifts Zomato’s status to a “domestic” company by reducing its foreign ownership below 50%. This strategic move allows Zomato’s quick-commerce unit, Blinkit, to adopt an inventory-led model, giving the company more direct control over products and warehousing.
The timing of this capital raise is crucial, especially following rival Swiggy’s recent $1.35 billion IPO. Additionally, Zepto, another quick-commerce startup, secured $350 million in funding, showcasing the intense competition in the market. Despite Zomato’s share price seeing a slight dip after the fundraise, the company’s year-to-date performance remains strong, with shares up 127.7%.
Zomato’s co-founder and CEO, Deepinder Goyal, highlighted the importance of raising additional funds to maintain competitive parity in the quick-commerce market. As the industry projects over $6.5 billion in annual revenues, Zomato aims to solidify its position as the market leader, especially with the entry of new players like Flipkart, Reliance, BigBasket, and Amazon.
Bank of America analysts emphasized the significance of first-mover advantage in the quick-commerce space, noting that Zomato’s leading market share of around 40% positions the company well for future growth. With the industry expected to face increased competition in the coming months, Zomato’s strategic fundraise and focus on maintaining its market position are crucial for its long-term success.
