ZOMATO RAISES ~760 CR, TO GO PUBLIC NEXT YEAR

Fund infusion by Tiger Global comes days after firm raised ~456 cr from Temasek arm

Food delivery company Zomato has raised ~760 crore ($102 million) in its Series J funding round from Us-based hedge fund Tiger Global Management. Zomato co-founder and Chief Executive Officer, Deepinder Goyal, said the Gurugrambased firm is planning an initial public offering by mid of next year.

Food-delivery firm Zomato has raised ~760 crore in Series J funding from Us-based hedge fund Tiger Global Management, according to the documents filed by Zomato, which were sourced from business intelligence platform Tofler.

Co-founder and Chief Executive Officer Deepinder Goyal, in an email to employees on Thursday, also said the firm was planning an initial public offering by the middle of next year.

“We have raised a lot of money, and today, our cash in the bank, about $250 million, is more than ever in our history,” Goyal’s email, reviewed by Business Standard, read. “Tiger Global, Temasek, Baillie Gifford, and Ant Financial have already participated in our current round, and there are more big names joining the round. We estimate that the current round will end up with us at $600 million in the bank very soon.”

The firm has allotted 25,313 Class J preference shares at an issue price of ~3,00,235 per share, having a face value of ~6,700 per share, to raise the capital from Tiger Global, according to the documents filed by Zomato, which were sourced from Tofler.

The infusion from Tiger Global came a few days after Zomato raised ~456 crore from Macritchie Investments, a subsidiary of Temasek Holdings. In April, the firm raised close to $5 million from Pacific Horizon Investment Trust, a fund managed by British investment management firm Baillie Gifford.

This is the first such investment by Tiger Global in the Indian online food ordering space, said an industry source. The infusion is expected to help Zomato compete with Swiggy and Amazon, which recently forayed into food delivery.

“We have no immediate plans on how to spend this money. We are treating this as a ‘war chest’ for M&AS, and fighting off any mischief or price wars

from our competition in various areas of our business,” Goyal wrote.

HSBC Global Research recently valued Zomato at $5 billion, a major increase from its earlier valuation of $3.5 billion.

“The best part is that our burn rate is very low, and our market share is accelerating in all regions,” Goyal wrote. “We are doing some of our best work without burning a hole in our pocket, and we should continue to do so.” Goyal said the finance and legal teams were working hard to take the company to IPO sometime in the first half of next year.

“The value of our business is going up dramatically… We hope to create a lot of value for our employees who have esops (employee stock ownership plan) sometime in the next year,” Goyal wrote in the mail.

Analysts said the new infusion is a major relief for Zomato. In August, Ant Group, which is the finance-focused company of Alibaba, had said that a change in foreign investment regulation in India led to “further evaluation” of the timing of its additional investment in Zomato.

In May, hit by lockdowns, Zomato said it would let go of 13 per cent of its staff, affecting close to 520 employees. According to sources, the number of employees at Zomato at the time was about 4,000. In July, Zomato said its revenue for FY20 grew 105 per cent to $394 million, while losses rose about 6 per cent to $293 million.

In its annual report, Zomato said Covid-19 had accelerated the company’s journey to profitability, despite initial hiccups.