Zomato's valuation crosses $5.4 billion, after raising $250 million

Ahead of its expected IPO, investors such as Kora, Tiger Global and Fidelity have made fresh investments in the Deepinder Goyal-led foodtech company

Food delivery giant Zomato has raised another $250 million in primary fundraise from existing and new investors, ahead of its expected initial public offering (IPO) this year. Info Edge (IE), which is an existing shareholder in Zomato said in a stock exchange filing that the transaction has taken the post-money valuation of the company to $5.4 billion. This is an increase from its previous valuation of $3.9 billion in December last year when it closed a $660 million primary financing round.

“On a fully converted and diluted basis, Info Edge’s effective stake in Zomato stands at 18.4 per cent,” said Info Edge in the stock exchange filing.
 

Five investors have backed the Gurugram-based unicorn in the new funding round. Existing investors Kora invested $115 million, Fidelity invested $50 million and Tiger Global injected $50 million. Other investors Bow Wave invested $20 million and Dragoneer put in $10 million in the company.
 

Covid-19 has now accelerated the business of foodtech companies. After initial hiccups, Deepinder Goyal-led Zomato is rapidly coming out of the pandemic's shadows. With people opting to stay at home due to Covid-19-related restrictions and curfews in several cities, Zomato and its rival Swiggy witnessed orders shooting through the roof on New Year’s Eve as people ordered biryanis, pizzas and cakes. Zomato served 4,254 orders per minute during peak time and Swiggy recorded peak number of orders per minute at 5,500.
 

December 2020 was also expected to be one of the highest ever GMV (gross merchandise value) month in Zomato’s history. It was clocking about 25 per cent higher GMV than its previous peaks in February 2020.
 

Zomato reported its revenues for the financial year 2019-20 at Rs 2,743 crore on a consolidated basis, up about 100 per cent since the last financial year. The firm also reported a consolidated net loss of Rs 2,386 crore during the same fiscal, up 138 per cent from the previous financial year, showed regulatory documents sourced from business intelligence platform Tofler. The firm’s total expenses for the fiscal were reported as Rs 5006 crore.
 

The Covid-19 pandemic and the resultant nation-wide lockdown had hit the firm in March 2020, bringing down order volumes significantly, according to the documents. This had also caused a huge reduction of the dine out revenue. The firm has been working on a number of products to address this loss, like introducing contactless dining and delivery and takeaway products in certain geographies outside of India.
 

The coronavirus pandemic is also expected to accelerate big-ticket venture capital, private equity as well as consolidation related deals in unicorns (a startup valued at more than $1 billion) and soonicorns in the country, according to many venture capitalists and industry experts. They said these mega deals which would be worth a few hundred million dollars might even go up to $1 billion in each company, especially in sectors such as e-commerce, edtech, fintech and foodtech which have benefitted from the tailwinds as the pace of digitisation increases.
 

For instance, Zomato’s rival Swiggy is in talks with new and existing investors including Qatar Investment Authority, GIC, Falcon Edge, Prosus and DST Global to raise almost $1 billion in funding this year at about $5 billion valuation, according to the sources.
 

Many of the investors strongly believe that there will be several IPOs (initial public offering) of India companies at the American stock exchange Nasdaq and New York Stock Exchange in addition to listing in India starting in 2021 and accelerating in 2022 and 2023. Top Indian companies such as Druva, Freshworks, InMobi and the likes of Zomato, Swiggy and Delhivery are looking to tap the public markets, according to industry sources.