Zomato Raises INR 8,500 Cr Via QIP At INR 252.62 Per Share

Zomato Raises INR 8,500 Cr Via QIP At An Issue Price Of INR 252.62

SUMMARY

Zomato raised INR 8,500 Cr via qualified institution placement of about 33.64 Cr equity shares at an issue price of INR 252.62 apiece, which was at a discount of 5% to the floor price of INR 265.91 a share

Of the total proceeds from the QIP, INR 2,137 Cr will be directed towards setting up and running operations of dark stores and warehouses

Deepinder Goyal said Zomato needs additional capital because of “the competitive landscape and the much larger scale of our business today”

Foodtech major Zomato has raised INR 8,500 Cr (around $1 Bn) through its first qualified institutional placement (QIP), with an aim to expand its quick commerce business Blinkit and support other key growth initiatives.

As part of the QIP, launched on November 25 and closed on November 28, the Deepinder Goyal-led company allocated about 33.64 Cr equity shares, with a face value of INR 1 each, to qualified institutional buyers at an issue price of INR 252.62 apiece, it said in an exchange filing.

The pricing represents a discount of 5% to the QIP floor price of INR 265.91 a share, and a discount of almost 12% from the stock’s previous close.

Of the total proceeds from the QIP, INR 2,137 Cr will be directed towards setting up and running operations of dark stores and warehouses. Further, Zomato plans to utilise INR 2,492 Cr towards advertising, marketing and branding initiatives across its businesses.

The foodtech giant plans to invest INR 1,769 Cr to strengthen its tech stack, including cloud infrastructure and software. The additional capital will likely also help Zomato scale its going-out or District vertical.

The timing of Zomato’s share sale, the company’s first major fundraise since its 2021 IPO, is particularly noteworthy, because it comes just weeks after its rival Swiggy’s public debut. The Sriharsha Majety-led company’s $1.4 Bn IPO was oversubscribed 3.59 times.

In a letter to shareholders, Zomato founder Deepinder Goyal said previously that the company needed additional capital because of “the competition landscape and much larger scale of our business today.”

This comes at a time when Zomato is facing fierce competition from Swiggy, Zepto and BigBasket in the rapid delivery segment. Last week, quick commerce major Zepto raised another $350 Mn from domestic investors. The company has secured a funding of over $1.3 Bn in the last five months alone.

Earlier it was reported that after the fundraise via QIP, Zomato would apply to the Reserve Bank of India (RBI) to cap its foreign institutional investment to 49%. Once Zomato shifts towards a majority domestic ownership, it would allow its quick commerce arm Blinkit to adopt an inventory-based model in India.

As per existing rules, foreign-owned companies are not allowed to own inventory sold within the country and can only conduct marketplace operations.

Step up your startup journey with BHASKAR! From resources to networking, BHASKAR connects Indian innovators with everything they need to succeed. Join today to access a platform built for innovation, growth, and community.