Investor Exits Continue At Zomato: Sequoia Sells 171.9 Mn Shares, Reduces Shareholding To 4.40%

Listed foodtech major Zomato has seen yet another investor offloading shares. This time, it is Sequoia who has sold 171.9 Mn shares of the company or about 2.01% of all the equity shares on the open market, Zomato’s regulatory filings with the Bombay Stock Exchange (BSE) show.

Sequoia completed the sale in two tranches, first selling the shares between September 6 and October 14 last year after Zomato’s IPO in July 2021. The latest sale saw the US-based venture capital firm offload shares between June 27 and August 25 this year.

Post the sale, Sequoia owns 375,895,935 shares or about 4.40% in the foodtech major.

It is also prudent to mention here that after Zomato completed the acquisition of quick commerce major Blinkit, Sequoia received 45,153,346 incremental equity shares of Zomato as part of the exit from Blinkit.

Zomato shares closed at INR 61.85 apiece on Friday (August 26). Having endured a rough patch after Zomato’s IPO lock-in period ended, the foodtech’s share price has become one of the biggest gainers on the BSE, going up by more than 40% in a month.

Exits At Zomato

This sale makes Sequoia the fourth major institutional investor that has sold off a part of its holdings since the lock-in period expired on July 23, 2022.

Moore Strategic Ventures became the first one to move, selling its entire holdings of 42.5 Mn shares in the open market days after the lock-in period ended. The move saw Zomato’s shares hit an intra-day low of INR 40.55 apiece, the lowest its share price has ever been.

Following Moore’s exit, Uber also sold all its Zomato holdings earlier this month. The ride-hailing major sold around 612 Mn shares for a total of $394 Mn, essentially getting a 100% return on its investment after it paid $200 Mn to join Zomato’s cap table, acquiring a 9.99% stake in the foodtech.

Tiger Global became the third institutional investor, selling half of its holdings in Zomato a day after Uber made an exit. Tiger Global sold 184.4 Mn equity shares at a share price of INR 50.44 apiece, making a profit of around 41.5% on the purchase value of the stake.

Interestingly, insurance players have been picking up the shares that institutional investors are offloading. Fidelity International, for instance, picked up a 5% stake in the foodtech major earlier this month. ICICI Prudential Life Insurance also bought 45 Mn shares of Zomato at INR 50.25 per share.

In the first quarter of the 2022-23 fiscal year, Zomato managed to narrow its losses to INR 186 Cr, almost a 50% decline from the INR 360 Cr it reported in the corresponding quarter last year. At the same time, its expenses increased by 40% year-on-year, reaching INR 1,767.7 Cr for the June quarter.

The foodtech startup said that its food delivery business broke even on an adjusted EBITDA basis in the June quarter.