Zomato Raises $250 Million in Primary Fundraise from Investors

Zomato Raises $250 Million in Primary Fundraise from Investors

By – Ashwathy Nair

• An effective stake of Info Edge in Zomato stands at 18.4 per cent.
• Five investors backed the Gurugram-based unicorn in the new funding round.
• Zomato is speedily coming out of the pandemic’s shadows.

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

In the stock exchange filing, Info Edge stated that “the effective stake of Info Edge in Zomato stands at 18.4 per cent on a fully converted and diluted basis.”

The Gurugram-based unicorn has been backed by five investors in the new funding round. Kora, which is an existing investor has invested $115 million, Tiger Global injected $50 million and Fidelity invested $50 million. Other investors Bow Wave invested $20 million and Dragoneer has put in $10 million in the company.

Covid-19 has now boosted the food-tech companies’ business. Deepinder Goyal-led Zomato comes rapidly out of the pandemic’s shadows after initial glitches. With people who are choosing to stay at home due to Covid-19 related restrictions and curfews in several cities, on New Year’s Eve, Zomato along with its rival Swiggy had witnessed orders shooting through the roof as people ordered cakes, biryanis, and pizzas. During the peak time, Zomato served 4,254 orders per minute and Swiggy recorder a peak number of 5,500 orders per minute.

On a consolidated basis, Zomato announced its revenues for the financial year 2019-20 at ₹2,743 crores, up around 100 per cent from the last financial year. During the same fiscal year, the company also posted a consolidated net loss of ₹2,386 crores, up 138 per cent from the previous financial year, as shown by regulatory documents from the Tofler business intelligence platform. The total expenses of the company for the fiscal were reported as ₹5006 crores.

The Covid-19 pandemic is also expected to accelerate big-ticket venture capital, private equity and consolidation related deals in unicorns, which is a startup valued at more than $1 billion and unicorns in the country, as per many venture capitalists and industry experts. They said that in each company, these mega deals worth a few hundred million dollars could even go up to $1 billion, particularly in sectors such as e-commerce, edtech, fintech and food-tech that have benefited from the tailwinds as the rate of digitalization rises.

For example, Zomato’s rival Swiggy, as per the sources, is in talks with new and established investors such as Qatar Investment Authority, GIC, Falcon Edge, Prosus and DST Global to raise nearly $1 billion in funding this year at about $5 billion valuations.

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

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