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Business News/ Companies / Start-ups/  Zomato raises $52 mn from US fund Kora
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Zomato raises $52 mn from US fund Kora

The capital was raised as part of an ongoing funding round that is expected to close at $600 million

Zomato CEO Deepinder Goyal. (File Photo: Mint)Premium
Zomato CEO Deepinder Goyal. (File Photo: Mint)

Foodtech unicorn Zomato has raised $52 million from US-based Kora Investments, continuing efforts to bolster its cash reserves at a time when the food delivery sector is rebounding from the ravages of the coronavirus pandemic.

The capital was raised as part of an ongoing funding round that is expected to raise as much as $600 million. The round has seen Zomato raise more than $270 million so far this year.

In September, Zomato closed a $62 million funding from MacRitchie Investments, a unit of Singapore state investment arm Temasek, and an additional $103 million from US-based hedge fund Tiger Global.

Kora is expected to make a follow-up investment of a larger amount in Zomato in the coming months, said a person aware of the talks. The person did not disclose the size of the next investment.

“Zomato’s current fundraising strategy is to woo more hedge funds for possible investments. Its plan on going public is making it an attractive proposition for these funds since they see faster exits. But whether the foodtech will be able to justify its valuation in the public markets is yet to be seen...hence, investors are taking a moderate approach," said the person cited above, who didn’t want to be named.

The food tech major may raise more funds from other hedge funds over the next few months, the person said, without elaborating.

Zomato founder and CEO Deepinder Goyal told employees in September that the company already has $250 million in the bank (after its fundraise from Tiger Global), and will use the cash reserve as a ‘war-chest’ for future acquisitions, and to fight-off any mischief or price wars from the competition.

Goyal also said that Zomato is likely to go public in the first half of 2021.

In the latest fundraising, Zomato Pvt. Ltd has allotted 12,656 Class J5 preferential dividend shares to Kora Investment I LLC at an issue price of 300,235, totalling a more than 1% stake in the food tech major, according to regulatory filings accessed through Tofler.

The news about Kora’s investment was first reported by Entrackr.

The ongoing funding round values Gurugram-based Zomato at $3.3 billion. In 2019-20, Zomato doubled its revenue to $394 million, although losses marginally widened to $293 million from $277 million in 2018-19.

In January, Zomato said it is raising $150 million from China’s Ant Financial. However, it has only received $50 million so far given the anti-China chorus and revised FDI norms amid border tensions.

In March, it raised $5 million from Pacific Horizon Investment Trust, managed by UK-based Baillie Gifford and Co. Ltd. In comparison, Zomato’s rival Swiggy raised $156 million in the first half of this year from Naspers and a clutch of other investors, valuing it at $3.6 billion.

Earlier this week, Zomato in a blog said the food delivery sector in India is registering 85% of pre-covid gross merchandise value, stating that the business has “recovered to (and even grown beyond) pre-COVID levels in a number of large pockets of the country".

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Published: 15 Oct 2020, 02:32 PM IST
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