Zomato has raised $1 billion through a so-called qualified institutional placement, completing its first major fundraise since its 2021 IPO.
The $30 billion food delivery and quick-commerce giant, which leads both those categories, issued approximately 336.5 million shares at ₹252.62 each ($3), according to a stock exchange filing on Friday.
The placement, which opened on November 25 and closed on November 28, saw strong participation from leading domestic mutual funds. Motilal Oswal emerged as the largest investor, with its family of funds picking up 20.81% of the issue. ICICI Prudential’s funds secured 12.78%, while HDFC and Kotak funds acquired 8.68% and 5.95% respectively.
The new fundraise increases the domestic investors’ ownership in Zomato to over 50%, a key requirement mandated by the Indian law for e-commerce firms that wish to operate on an inventory-led model.
The timing of the capital raise is also strategic, coming just weeks after rival Swiggy’s $1.35 billion IPO earlier this month. Zepto, another leading quick commerce startup, secured $350 million earlier this month in a deal brokered by Motilal Oswal.
Shares of Swiggy dropped 4.1% on Friday, capping this week’s overall rally to 12.8%. Shares of Zomato, offered to investors participating in QIP at a 5% discount, fell roughly 1% Friday, but remain up 127.7% year-to-date.
Zomato co-founder and CEO Deepinder Goyal said last month that the firm, which already had $1.3 billion in cash reserves, was seeking the additional funds to maintain competitive parity.
The company, which recently reported its second consecutive quarterly profit, leads India’s quick-commerce market through Blinkit, competing against well-funded rivals like Swiggy, Zepto, and BigBasket in a sector projected to generate over $6.5 billion in annual run-rate revenues.
“We see the quick commerce industry going through a phase of increased competition in the next 6-12 months. Incumbents in quick commerce are looking to or have already raised capital. Four new names including Flipkart, Reliance, BigBasket & Amazon are looking to enter the quick commerce space,” Bank of America analysts said in a note.
“In this space, first mover advantage matters, and given the TAM is c. 30 mn households (330 mn households in India), we believe it is logical for the market leader Zomato to want to maintain its leading c. 40% share.”
