Zomato‘s board is expected to review and approve a proposal to raise INR 8,500 crore (about $1 billion) at their October 22 meeting. This would be the company’s first fundraise since its stock market debut in 2021.
According to CNBC-TV18, the Deepinder Goyal-led company might ask the Reserve Bank of India (RBI) to limit foreign institutional investors’ shareholding in the company to 49%.
If Zomato’s board approves the proposal, it would let the company boost domestic shareholding above 50%. In an October 17 exchange filing, Zomato said it would seek board approval to raise funds through a qualified institutions placement. Additionally, the company will reveal its Q2 FY25 earnings on October 22.
Flipkart Minutes, BigBasket hinder Zomato’s market growth
However, Zomato plans to raise funds while facing strong competition in the quick commerce market from Swiggy Instamart, Zepto, and new players like Flipkart Minutes, BigBasket, and JioMart.
Notably, Zomato’s net profit soared to INR 253 crore in Q1 FY25 from INR 2 crore in the same quarter last year. Their operating revenue rose 74% to INR 4,206 crore in the June quarter from INR 2,416 crore in Q1 FY24, due to strong growth from Blinkit.
This new funding will likely help Zomato expand its ‘going-out’ segment too. Previously in this year, Zomato bought Paytm’s entertainment ticketing business for INR 2,048 crore. Additionally, the food tech giant is seeing high demand for event tickets sold exclusively on its platform.
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Zomato’s new ‘District’ for going-out business
Furthermore, Zomato is set to introduce a new app called ‘District’ for its going-out business. To boost its events section, Zomato recently hired Kunal Khambhati, former head of live events and IP at BookMyShow. Industry reports suggest Zomato is also considering relaunching its quick parcel service, Xtreme, to focus on food delivery. Launched in October 2023, Xtreme was initially a logistics service for merchants with its own app.
Meanwhile, the company also experienced leadership changes recently. Co-founder and CPO Akriti Chopra resigned last month, and independent director Gunjan Soni stepped down this month due to increased work commitments.
Closing at INR 270.65 on the BSE, Zomato shares fell 1.3% on Thursday.
