Zomato raises ₹8,500 crore via QIP at ₹252.62 per share to bulk up cash reserves

Bengaluru: Food and grocery delivery player Zomato has raised ₹8,500 crore through its qualified institutional placement (QIP), allocating 33.64 crore shares at ₹252.62 apiece, it said in a filing with the stock exchanges on Friday.

The price includes a discount of ₹13.29 per share, which is 5% of the floor price of ₹265.91. The issue opened on 25 November and closed on 28 November.

The proceeds are expected to be used to expand its quick commerce arm, Blinkit, at a time when the sector is witnessing surge in demand, with rivals Swiggy and Zepto simultaneously bulking up their cash reserves to stay in the competition. 

Also Read: Quick comm makes a dash for food deliveries

The Gurugram-based company’s cash balance fell to ₹10,800 crore in the September quarter of FY25 from ₹14,400 crore when it launched an initial public offering (IPO) in 2021, mainly on account of funding past quick-commerce losses and some equity investments and acquisitions. The firm acquired Paytm’s events ticketing business for ₹2,014 crore in August, an effort to broaden its services beyond food and grocery delivery.

Zomato believes it needs to enhance its cash balance given the competitive landscape and the much larger scale of the business today, it said in a letter to shareholders last month.

“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 chief executive officer Deepinder Goyal said.

However, the company noted that the fundraise is only for strengthening the balance sheet and will not be used to make any minority investment or acquisition.

Zomato’s shares were trading 1.3% lower at ₹282.2 apiece at the time of publication.

Motilal Oswal, ICICI Prudential, and HDFC Mutual Fund were among the entities who were allotted more than 5% of the shares offered in the issue. Motilal Oswal’s private wealth arm led a $350 million funding round in Zepto last week.

Rival Swiggy raised ₹5,085 crore from anchor investors alone ahead of its initial public offering (IPO) earlier this month. Another competitor, Zepto, bagged $350 million in funding from Motilal Oswal’s private wealth arm last week, aiming to strengthen its dark store operations as it gears up for a public-market listing in FY25.

Mint reported earlier this week that Lightspeed-backed Zepto’s fundraise was done to increase domestic ownership and not because it needed cash, according to co-founder and chief executive Aadit Palicha. “... The financing was done very candidly to increase domestic ownership. And that is exactly what we were able to achieve. We pulled off the largest domestic fundraise for a startup in Indian history. And we are moving towards domestic ownership next fiscal year.”