Zomato Raises $562 Million in Funding Before IPO

Zomato IPO Fully Subscribed on Day One

Updated at 7pm IST on July 14: Zomato’s initial public offering, valued at $1.3 billion, achieved full subscription on its inaugural day. The preceding original report is detailed below.

Anchor Investor Funding

Zomato, the Indian food-delivery company, announced Tuesday evening that it secured $562.3 million in funding from anchor investors prior to the IPO launch on Wednesday.

The company has already obtained approximately 45% of the $1.3 billion it intends to raise through the IPO. This information was disclosed in a filing to Indian stock exchanges by the 12-year-old startup, headquartered in Gurgaon.

The public share sale is scheduled to commence on Wednesday and conclude on Friday.

Key Investors

Notable investors supporting Zomato’s entry into the public markets include Tiger Global, Fidelity, New World, Baillie Gifford, the Government of Singapore, Canada Pension Plan, Mirae Asset, T. Rowe Price, and Steadview.

These investors acquired shares at Rs 76 ($1), representing the upper limit of the price range for Zomato’s shares.

This valuation implies a total company value of $8.6 billion for the Indian startup, an increase from the $5.4 billion valuation recorded in February of this year.

Market Confidence

The oversubscription demonstrates the substantial confidence that prominent investors have in the first significant consumer internet offering within the world’s second-largest internet market.

Future Focus and Competition

During a virtual press conference last week, Zomato’s leadership indicated that the company, operating in nearly two dozen markets for search and discovery, will primarily concentrate on the Indian market.

Future expansion may include exploring new categories, such as online grocery delivery.

Executives downplayed Amazon’s competitive threat, stating, “Currently, Amazon has not significantly impacted our market share.” Amazon entered the food delivery sector last year and currently operates only in Bangalore.

Swiggy, supported by SoftBank Vision Fund 2 and Prosus Ventures, remains Zomato’s primary competitor within India.

Financial Performance

For the financial year ending in March of this year, Zomato’s revenue decreased by 23% to $283 million.

However, the company also reduced its losses to $110 million, a 66% decrease compared to the same period in the previous year.