Zomato secures US$1B via QIP

INDIA – Food delivery giant Zomato has announced it has secured INR 85 billion (US$1 billion) through a qualified institutional placement (QIP), the company’s first major fundraising since its IPO in 2021.

Zomato is intensifying efforts to strengthen its quick commerce operations amidst growing market competition.

The company, led by CEO Deepinder Goyal, conducted a Qualified Institutional Placement (QIP) from November 25 to November 28, 2024, raising INR 84.99 billion (US$ 1 billion).

The 336.5 million shares were priced at INR 252.62 (US$ 2.98) each, reflecting a 5% discount from the floor price of INR 265.91 (US$ 3.14).

Domestic mutual funds played a key role in the QIP. Motilal Oswal’s funds emerged as the largest investor, acquiring 69.2 million shares, equivalent to 20.81% of the issue.

ICICI Prudential and HDFC funds secured 12.78% and 8.68% of the shares, respectively, while Kotak’s mutual funds received 6%, spread across multiple schemes.

In a letter to shareholders, CEO Deepinder Goyal emphasized the importance of boosting the company’s cash reserves to remain competitive and support its expanding operations.

The funds raised include INR 21.37 billion (US$252.3 million) earmarked for enhancing Blinkit, Zomato’s quick commerce unit. This investment will focus on improving infrastructure for hyperlocal deliveries.

With the QIP proceeds, Zomato’s cash reserves surged to approximately INR 193 billion (US$ 2.28 billion), up from INR 108 billion (US$ 1.28 billion) reported at the end of Q2 FY25.

The company also reported a remarkable 388.9% year-on-year profit growth in Q2 FY25, reaching INR 1.76 billion (US$ 20.78 million), alongside a 68.5% rise in revenue from operations.

The funds will further Zomato’s efficiency-driven market expansion strategy. In November, the company introduced “Food Rescue,” a feature aimed at reducing food waste from canceled orders.

This initiative offers canceled meals to nearby users at discounted rates, maintaining freshness and safety with sealed packaging.

The feature operates within a 3 km radius of the delivery partner, ensuring quality by limiting availability to a short timeframe. Privacy measures prevent the original buyer or nearby users from reclaiming the order.

In late October, Zomato launched an order scheduling feature, enabling customers to plan deliveries up to two days in advance.

Available in over 35,000 restaurants across 30 cities, including Mumbai, Delhi, Pune, Bengaluru, and Ahmedabad, this feature offers alternative time slots if the preferred option is unavailable, enhancing convenience for users.

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