Three days ago, food delivery aggregator Zomato initiated its Qualified Institutional Placement (QIP) issue. Now, the firm has successfully raised $1 billion through the QIP. This marks its first major fundraising since its IPO three years ago. This development comes weeks after Swiggy had a spectacular IPO, listing at a premium of 7%, and a week after Zepto secured an additional $350 million from domestic investors.
According to reports, the funds were raised approximately 336.5 million shares (33,64,73,755 equity shares to be precise) at ₹252.62 each, attracting strong interest from institutional investors. Prominent domestic mutual funds, including Motilal Oswal (who secured over 20% of the issued shares), ICICI Prudential (secured 12.78% of the shares), HDFC (it secured 8.68% of the issued shares), and Kotak (which secured 5.95% of the shares), to name some, acquired significant stakes in the Indian startup. With this development, the firm’s foreign ownership drops below the 50% mark and reclassifying the company as a domestic entity. This move unlocks regulatory benefits for Blinkit, Zomato’s quick-commerce subsidiary, allowing it to adopt an inventory-led model under Indian law.
According to reports, the proceeds from the QIP will be deployed across various initiatives. Most of it will focus on expanding Blinkit’s network of dark stores and warehouses to streamline its operations, as well as compete with the likes of Instamart and Zepto in the domestic quick commerce landscape. Funds will also be allocated towards Zomato’s tech infrastructure – including cloud capabilities – as well as towards advertising and marketing initiatives to strengthen the firm’s presence in a competitive market. Shares of Swiggy were down 4.1% today, and are currently priced at ₹279.40.
This development comes at a time when the firm reported a 389% year-on-year surge in net profit for the second quarter of FY25, reaching ₹176 crore, alongside a 68% increase in revenue to ₹4,799 crore. In addition to this, the firm has $1.3 billion in cash reserves. “While the business is now generating cash, we believe that we need to enhance our cash balance, given the competitive landscape and the much larger scale of our business today,” Deepinder Goyal, CEO of Zomato, had commented in September while announcing the company’s financials for the quarter. “We believe that capital alone does not give anyone the right to, but we want to ensure that we are on a level playing field with our competitors, who continue to raise additional capital,” he added.