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zomato IPO: Zomato set to close $500 million pre-IPO funding round


Mumbai: Online food delivery platform Zomato is closing a fresh $500 million investment in what is being widely regarded as a pre-IPO funding round, valuing the company at about $5.5 billion, two people in the know said.

The latest fundraise, which comprises a mix of primary cash infusion of $250 million by existing backers and a similar amount by way of secondary sale of shares by Chinese investors Ant Group and Sunlight Fund, comes amid heightened geopolitical tension between India and China.

Existing investors Tiger Global, Kora Investments, Steadview, Fidelity, Bow Wave, Vy Capital along with new entrant Dragoneer Group, have participated in the latest funding round, said a person in the know of the development who did not want to be named as the discussions were private.

With the fresh capital, Zomato is expected to have $1 billion in cash as it inches closer to its public market debut, said another person familiar with the goings-on in the company.

“Zomato is aiming for an IPO by June this year valuing the company at $6-8 billion in the public market,” said a person familiar with the matter. Sources said Goldman Sachs, Morgan Stanley, Credit Suisse and Kotak Mahindra Bank have been appointed by the company to run its IPO process.

Zomato co-founder Deepinder Goyal did not comment on ET’s query.

zomato-fundingETtech

A spokesperson for the Ant Group, in an emailed response, said, “Ant Group remains committed to our vision of bringing inclusive financial services to global consumers and small-and-micro businesses, by working closely together with our global partners, including Zomato.”

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Once the partial stake sale by Ant — an Alibaba Group affiliate — is executed, Sanjeev Bikhchandani-founded InfoEdge, an early investor in the Gurugram-based company, will emerge as the largest shareholder in Zomato with an estimated holding of about 17%.

The Ant Group once owned about 25-26% stake in Zomato up until the company’s recently concluded $660 million financing at a $3.9 billion valuation.

Last April, the restaurant discovery and food-ordering firm faced a roadblock in its fundraising plan as India enforced new foreign direct investment rules, curbing Chinese capital flowing into Indian companies. Ant had at the time committed to invest $150 million in Zomato but only $50 million came through. Ant and its parent Alibaba have since then been steadily cutting their India exposure having partially sold stakes in egrocery player BigBasket and Zomato.

In response, Zomato roped in ten investors in its last fundraise, which the company announced in December.

DoorDash IPO


What has helped Zomato create a lot of interest among investors is the
highly successful IPO of SoftBank-backed DoorDash in December when the US-based food-delivery startup opened trading at $182, which was 78% above its IPO price on the New York Stock Exchange. Having raised roughly $3.4 billion, DoorDash’s valuation was at $34.2 billion, more than double its $15 billion valuation in the private market a year ago.

What’s also gone in favour of both Zomato and rival Swiggy
is the revival in the online food ordering sector post a few tough months when the nationwide lockdown was imposed to check the spread of Covid-19 last year.

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Goyal had said in a series of tweets while announcing the $660 million fundraise that Zomato
was on track to record its best-ever monthly sales in December 2020. “We are now clocking around 25% higher GMV (gross merchandise value) than our previous peaks in February 2020,” he had tweeted. “The tailwinds for food delivery businesses are clearly visible, and we believe that the growth of the sector will accelerate post vaccine.”





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