Zomato To Launch INR 8,500 Cr QIP In December

Foodtech giant Zomato is reportedly looking to launch its INR 8,500 Cr qualified institutional placement (QIP) in December, depending on market conditions.

The company has selected investment bank Morgan Stanley for the QIP, Moneycontrol reported citing sources. The report added that the Deepinder Goyal-led company might add one or two more investment banks for the fundraise.

Zomato declined to comment on Inc42’s queries on the development.

Last month, Zomato said it received the approval of its board to raise up to INR 8,500 Cr (about $1 Bn) via QIP. Zomato said that the board formulated a fund raising committee to decide the structure, form of issuance, price, discounts, terms and conditions of the QIP.

With this, the company is looking to enhance its cash balance, especially when its cash reserve declined to INR 1,726 Cr at the end of September 2024 quarter on account of INR 2,048 Cr investment for the acquisition of Paytm’s entertainment ticketing business. 

“… We believe that we need to enhance our cash balance given the competitive landscape and the much larger scale of our business today. We believe that capital by itself does not give anyone the right to win (and that service quality is the key determinant of success), but we want to ensure that we are on a level playing field with our competitors, who continue to raise additional capital,” Zomato founder and CEO Deepinder Goyal then said.

Goyal added that the company has no plans to use the funds for any minority investments or acquisitions. 

Earlier, reports said that the QIP will see the company’s domestic shareholding increase to over 50%. The details of the shareholders who will partake in the round is unclear at the moment.

On the back of a strong growth in its quick commerce arm Blinkit, Zomato reported a 389% year-on-year (YoY) increase in its consolidated net profit to INR 176 Cr during the September quarter of 2024. 

However, the competition is rising fast in the quick commerce space, and Zomato is likely to use the proceeds from the QIP fundraise to further ramp up the dark store network for Blinkit. The quick commerce arm’s competitors are also flush with funds.

On Wednesday (November 13), Zomato’s rival Swiggy, which operates Instamart, made its public market debut after an over INR 11,000 Cr IPO. Earlier this year, Zepto raised more than $1 Bn within a period of three months to expand its network.

Besides, Flipkart, JioMart, and BigBasket are also increasing their quick commerce network.