Indian food delivery app Zomato has raised $1 billion from institutional investors, completing its first major fundraising since its 2021 initial public offering.
The food delivery and quick-service giant has issued around 336.5 million shares priced at ₹252.62 each ($3) in a qualified institutional placement, according to an exchange filing on Friday.
The fundraising saw strong participation from leading Indian investment funds. Motilal Oswal emerged as the largest investor, with its family of funds raising 20.81% of the issued shares. ICICI Prudential’s funds gained 12.78%, while HDFC and Kotak’s funds gained 8.68% and 5.95% respectively.
The $1 billion fundraising strategically shifts Zomato’s status to a ‘domestic’ company by bringing foreign ownership below 50%. This would allow the fast trading unit, Blinkit, to adopt an inventory-driven model (currently limited to domestic companies), allowing direct control over products and storage.
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 high-speed commerce startup, raised $350 million this month in a deal brokered by Motilal Oswal.
Shares of Swiggy fell 4.1% on Friday, taking the week’s total rally to 12.8%. Shares of Zomato, offered to investors participating in the share placement at a 5% discount, fell around 1% on Friday but remain up 127.7% this year. Zomato has a market capitalization of around $30 billion.
Zomato’s co-founder and CEO Deepinder Goyal said last month that the company, which already had $1.3 billion in cash reserves, was raising additional resources to maintain competitiveness.
The company, which recently reported its second straight quarterly profit, is the market leader in India with Blinkit and competes with well-funded rivals such as Swiggy, Zepto and BigBasket in an industry expected to generate more than $6.5 billion in annual run-rate revenues. will generate.
“We see the quick commerce industry going through a phase of increasing competition over the next six to 12 months. Established quick commerce players are looking for capital or have already done so. Four new names including Flipkart, Reliance, BigBasket and Amazon, are looking to enter the high-speed commerce space,” Bank of America analysts wrote in a note to clients.
“In this space, first mover advantage matters, and with the TAM covering approximately 30 million households (330 million households in India), we believe it makes sense that market leader Zomato would want to maintain its leading share of approximately 40%. “
