Food delivery giant Zomato is planning to launch a INR 8,500 crore qualified institutional placement (QIP) in December 2024, depending on market conditions.
Morgan Stanley to manage Zomato’s QIP
Based on information from Money Control, which cited sources that Investment bank Morgan Stanley has been selected to manage the QIP, with one or two additional banks potentially being added.
Continue Exploring: FirstCry narrows loss to INR 62.85 Cr, revenue jumps 26.7%
Notably, Zomato received board approval last month to raise up to INR 8,500 crore via QIP. The company aims to enhance its cash balance, which declined to INR 1,726 crore at the end of September 2024, following a INR 2,014 crore investment in Paytm‘s entertainment ticketing business.
“… We believe that we need to enhance our cash balance given the competitive landscape and the much larger scale of our business today. We believe that capital by itself does not give anyone the right to win (and that service quality is the key determinant of success), but we want to ensure that we are on a level playing field with our competitors, who continue to raise additional capital,” Zomato founder and CEO Deepinder Goyal added.
Zomato’s QIP to surge domestic shareholding
Further, Goyal emphasised that the funds will not be used for minority investments or acquisitions. The QIP is expected to increase domestic shareholding to over 50%, although details on participating shareholders are unclear.
Continue Exploring: FMCG growth sluggish due to rising housing cost and lower wage in urban areas – Britannia
Meanwhile, the food tech giant reported a 389% year-on-year (YoY) increase in consolidated net profit to INR 176 crore during the September quarter, driven by strong growth in its quick commerce arm Blinkit. However, competition is rising, with rivals Swiggy, Zepto, Flipkart, JioMart, and BigBasket expanding their quick commerce networks.
The QIP proceeds are likely to be used to ramp up Blinkit‘s dark store network. Goyal’s strategy focuses on service quality, stating, “We want to ensure that we are on a level playing field with our competitors, who continue to raise additional capital.”
Reportedly, Zomato’s QIP comes as Swiggy made its public market debut last week, following an over INR 11,000 crore IPO. Zepto also raised over $1 billion earlier this year to expand its network.
