Friday, 2023 September 29

Ant Group-backed Indian food delivery giant Zomato to go public in 2021

As the online food delivery giant Zomato raises USD 103 million led by Tiger Global Management hoping to close its ongoing USD 600 million funding round, the company is charting out a plan to go public next year.

On Thursday, Zomato’s co-founder and CEO Deepinder Goyal, in an email to his employees, said the company is working hard to go for an initial public offering by the first half of 2021.

“Our finance and legal teams are working hard to take us to IPO sometime in the first half of next year. We hope to create a lot of value for our current employees who have Esops (employee stock ownership plans) sometime in the next year,” Goyal wrote in the email, according to local media reports.

Indian internet company Info Edge, which has a 22.2% stake in the food delivery giant, in a recent regulatory filing said Zomato has raised USD 103 million from New York-based Tiger Global Management as a part of its ongoing Series J financing. This comes a week after the company landed about USD 62 million from Temasek’s MacRitchie Investments. The latest transaction values Zomato at USD 3.3 billion, a notch up from the previous USD 3.25 billion-valuation, said a report by local media Mint.

“We have raised a lot of money, and today, our cash in the bank, around USD 250 million, is more than ever in our history,” he said. “We estimate that our current round will end up with us at USD 600 million in the bank very soon…”

This gives the food delivery unicorn an upper hand as it eyes a bigger pie of the soon-to-be USD 17.02 billion food delivery market.

“We have no immediate plans on how to spend this money. We are treating this cash as a ‘war chest’ for future M&A and fighting off any mischief or price wars from our competition in various areas of our business…,” Goyal added.

Its largest rival, Swiggy raised USD 156 million earlier this year from South African conglomerate Naspers, Chinese on-demand services giant Meituan Dianping, and Boston-based investment firm Wellington Management Company, among others, and is valued at USD 3.6 billion.

The Gurugram-based company has been trying to improve its unit economics over the past one year. In July, it was able to keep its burn rate under USD 1 million. Zomato has registered a strong recovery of its food delivery business at 80% of pre-COVID-19 levels. However, its losses marginally rose to USD 293 million in FY 2019-20 compared to USD 277 million in FY 2018-19. Its revenues doubled to USD 394 million in FY 2019-20.

Apart from Zomato, tech companies such as Oyo, Policybazaar, Ola, Paytm, Quikr, and others have also said they would soon launch their IPO.

Moulishree Srivastava
Moulishree Srivastava
In-depth, analytical and explainer stories and interviews on technology, internet economy, investments, climate tech and sustainability. Coverage of business strategies, trends in startup and VC ecosystems and cross-border stories capturing the influence of SEA, China and Japan on the local startup industry.

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