Zomato secures $1 billion in major fundraising effort

In India, Zomato successfully raised $1 billion through a qualified institutional placement, an event that marked its first significant fundraising since its IPO in 2021. The share issuance spanned from November 25 to November 28, resulting in the distribution of approximately 336.5 million shares at a price of ₹252.62 ($3) each. The capital raise was notably supported by major domestic mutual funds, with Motilal Oswal being the largest investor, acquiring over 20% of the total issue. Other significant participants included ICICI Prudential, HDFC, and Kotak, securing substantial portions as well. This fundraising is pivotal as it allows Zomato to shift its corporate status to that of a domestic company, with foreign ownership remaining below 50%. This change in classification enables its quick-commerce segment, Blinkit, to adopt an inventory-led model, which is a strategy that domestic firms can employ to have greater control over warehousing and product distribution. The timing of this fundraising was strategically planned, occurring just weeks after rival Swiggy's own IPO that raised $1.35 billion. In the competitive landscape of quick commerce, which is expected to intensify over the next 6-12 months, Zomato sees the need for additional funds to maintain competitiveness amidst potential new entrants such as Flipkart and Reliance. Its CEO, Deepinder Goyal, has acknowledged the increasing competitive pressures in the market. Analysts have pointed out that the quick commerce industry is poised for significant competition as incumbents continue to raise capital, indicating that the move could be essential for Zomato to retain its leading market share of approximately 40%. The total addressable market within this sector is estimated to be around 30 million households in India, making it crucial for Zomato to leverage its first-mover advantage to sustain or grow its market position.