Venture Capital: Zomato’s Pre-IPO Raise Nabs $250M At $5.4B Valuation

February 23, 2021 | News, Venture Capital
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That valuation is up sharply from the $3.9 billion tag Zomato earned in December.

Indian foodtech unicorn Zomato reeled in $250 million in a pre-IPO fundraise from new and existing investors. The startup’s IPO is likely in June this year. (Mint)

The round was led by Kora Management, which invested $115 million. Other existing investors were Fidelity Management and Research ($55 million) and Tiger Global Management ($50 million). New investors, Bow Wave Capital and Dragoneer Investment Group invested about $20 million and $10 million, respectively.

Zomato’s cash hunt

In December the foodtech giant raised $660 million, taking on 10 new investors, including Baillie Gifford, Luxor Capital, Steadview, D1 Capital and Mirae Asset. The round valued it at $3.9 billion. The current round is therefore nearly 40% higher in a matter of a couple of months.

Zomato is boosting its cash reserves to fight off competition and for strategic acquisitions.

In January, Zomato acquired a 100% stake in full-stack sports platform Fitso for Rs 100 crores. This was its first acquisition after it snapped up Uber Eats in January 2020.

According to Fintrackr, the company’s losses surged 2.4X to Rs 2,385.6 crore in FY20. The online food delivery major also registered a 98.4% jump in its collections to Rs 2,605 crore in FY20 from Rs 1312.6 crore in FY19.

Indian listed company Info Edge (NSE: NAUKRI) now holds an 18.4% stake in Zomato.

In February, the Economic Times reported that Zomato had restructured its capital base to create 8.80 billion new shares, increasing its capital by three times from Rs 535 crore to Rs 1,448 crores. This is widely construed as a pre-IPO move.

Swiggy aiming for cash too

Meanwhile, Swiggy, Zomato’s biggest competitor in the Indian food delivery business, is in talks to raise $800 million from Qatar Investment Authority, GIC, and Falcon Edge at a post-money valuation of $5 billion, a jump from the current $3.6 billion.

The raise will arm Swiggy with a war chest of about $1 billion and allow it to take on an IPO-emboldened Zomato this year.

Related Story:    COVID Forces Indian Food Delivery Apps Swiggy and Zomato To Slash Workforce

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