Zomato has raised INR 8,500 Cr (around $1 Bn) through its first qualified institutional placement (QIP), with the aim of expanding its quick commerce business Blinkit and supporting other key growth initiatives.
Zomato allocates shares at price of INR 252
The QIP, launched on November 25 and closed on November 28, allocated about 33.64 Cr equity shares to qualified institutional buyers at an issue price of INR 252.62 apiece.
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The pricing represents a discount of 5% to the QIP floor price of INR 265.91 a share, and a discount of almost 12% from the stock’s previous close. Zomato plans to utilize the funds raised from the QIP to support its growth initiatives, including setting up and running operations of dark stores and warehouses, advertising, marketing, and branding initiatives, and strengthening its tech stack.
Of the total proceeds from the QIP, INR 2,137 Cr will be directed towards setting up and running operations of dark stores and warehouses. Further, Zomato plans to utilise INR 2,492 Cr towards advertising, marketing and branding initiatives across its businesses. The foodtech giant plans to invest INR 1,769 Cr to strengthen its tech stack, including cloud infrastructure and software. The additional capital will likely also help Zomato scale its going-out or District vertical.
Zomato’s founder Deepinder Goyal had previously stated that the company needed additional capital because of “the competition landscape and much larger scale of our business today.” This comes at a time when Zomato is facing fierce competition from Swiggy, Zepto, and BigBasket in the rapid delivery segment.
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Zepto secures $350 million from local investors
In the previous week, Zepto raised an additional $350 million from local investors. Over the past five months, they have secured more than $1.3 billion in funding.
Furthermore, it’s been reported that Zomato plans to ask the Reserve Bank of India (RBI) to limit its foreign investments to 49% after its recent funding. By doing this, Zomato aims to gain majority domestic ownership, which would allow its quick commerce division, Blinkit, to manage its own inventory in India.
Currently, foreign-owned companies in India can’t own the inventory they sell and can only operate marketplaces.
