Food delivery major Zomato raises Rs 8.5K cr via QIP, expansion on menu

Funding was led by Motilal Oswal and ICICI Prudential

Food delivery major Zomato on Friday announced that it had raised Rs 8,500 crore ($1 billion) through a qualified institution placement (QIP) in its first major fundraise since public listing in July 2021.

 

The company’s Board, in a meeting held on November 29, approved the issue and allotment of 336,473,755 equity shares at an issue price of Rs 252.62 per share.

 

The fundraise is aimed at strengthening Zomato’s balance sheet and fuelling its expansion plans, as competition is heating up in the quick commerce and food delivery space. As much as Rs 2,137 crore will be used to expand Blinkit’s network of dark stores and warehouses.

 

 

The firm’s cash balance stood at Rs 10,800 crore as of the second quarter of the current financial year (Q2FY25). The new funds would take this to Rs 19,300 crore.

 

The funding round has also increased domestic ownership of the company, which is seen as an attempt to safeguard against volatility related to foreign ownership from a policy perspective. After the QIP, domestic shareholding will be slightly below 50 per cent.

 

The fundraise saw strong participation from domestic mutual fund houses. Motilal Oswal – who accounted for 21 per cent of the issue size pumped in over Rs 1,700 crore, while ICICI Prudential picked up 13 per cent of the QIP. Others included HDFC Mutual at 8.68 per cent, and Kotak at 5.95 per cent.

 

“While the business is now generating cash, we believe that we need to enhance our cash balance, given the competitive landscape and the much larger scale of our business today,” said Zomato CEO Deepinder Goyal while announcing the company’s September quarter results.

 

“We believe that capital alone does not give anyone the right to, but we want to ensure that we are on a level playing field with our competitors, who continue to raise additional capital,” he added.

 

Zomato’s profit after tax (PAT) jumped five times to Rs 176 crore in Q2FY25, from Rs 36 crore during the same period a year ago. However, PAT was down 30 per cent from Rs 253 crore in Q1FY25. Its revenue from operations rose 69 per cent year on year (Y-o-Y) to Rs 4,799 crore in Q2, up from Rs 2,848 crore a year ago. It had reported a revenue of Rs 4,206 in the previous quarter.

 

Zomato’s QIP comes at a time when domestic institutional investors are betting big on India's burgeoning quick commerce sector.

 

Earlier this month, Motilal Oswal’s Private Wealth division also led a $350 million funding round in Zepto, as the company looked to get more domestic investors on its cap table ahead of its public listing next year.

 

Newly listed food delivery major Swiggy, too, saw several homegrown investors, including SBI Mutual Fund, ICICI Prudential Mutual Fund, Kotak Mutual Fund, Axis Mutual Fund, and HDFC Life participate in an anchor round ahead of its IPO, which raised Rs 5,085 crore.