Alibaba Sells Zomato Stake Worth INR 1,631 Cr, Temasek Buys 9.8 Cr Shares

Alibaba, through its Alipay Singapore Holding, sold almost half of its stake in Zomato, or 26.3 Cr shares, worth INR 1,631 Cr in a bulk deal on Wednesday (November 30), as per the NSE’s bulk deal data.

As of September this year, Alipay held 55.9 Cr shares, or a 6.54% stake, of the foodtech startup. After selling 3.15% of its stake in the company today, Alipay currently holds a 3.39% stake in Zomato.

The stake sale decreased Alibaba’s total stakeholding in Zomato to 9.83% from 12.98% previously. Alibaba holds its stake in the foodtech giant via Alipay and Antfin Singapore Holding.

Alipay invested $360 Mn in Zomato in 2018 and held a total of 77.7 Cr shares in the startup at that time. However, just prior to Zomato’s IPO in July last year, Alibaba’s payment affiliate sold 21.8 Cr shares of the startup.

Despite Alibaba’s stake sale, shares of Zomato ended today’s session 2.6% higher at INR 65.2 on the BSE.

While Alibaba sold a part of its stake in Zomato, Temasek bought shares of the startup. The Singaporean sovereign wealth fund bought 9.8 Cr shares of Zomato worth INR 607.6 Cr in a bulk deal through its wholly-owned subsidiary Camas Investments Pte.

The development comes at a time when there are concerns about the profitability of new-age tech startups, including Zomato, due to the current global macroeconomic scenario and fears of a looming recession. Analysts are also divided on these stocks, but most see them as good investments for long-term returns. For Zomato, the sentiment is similar.

Earlier this year, several investors of Zomato, including Moore Strategic Ventures and Uber, sold their stakes following the expiry of the lock-in period for the pre-IPO investors of the foodtech startup.

Uber exited Zomato with 2X returns on its total investment after selling 61.2 Cr shares for $392 Mn (INR 3,095 Cr) in August.

Post that, Tiger Global and Sequoia also offloaded their stakes in Zomato.

Earlier this month, Zomato reported a year-on-year (YoY) decline in its consolidated loss to INR 250.8 Cr in Q2 FY23 from INR 434.9 Cr in the year-ago quarter. However, operating revenue increased 62% YoY to INR 1,661.3 Cr.

In its latest research note, brokerage Bernstein said Zomato was its top pick in its internet coverage. It estimated Zomato’s consolidated revenue to touch $1,649 Mn in FY24.