MUMBAI: Zomato has roped in New York-based investment fund Tiger Global as part of its current fundraising round, the online food delivery platform’s cofounder and CEO Deepinder Goyal said in an email to employees on Thursday. The Gurugram-based firm is also on course to tap the public markets by mid-2021, Goyal added in the email, which ET has seen.
“We have raised a lot of money, and today, our cash in the bank, around $250 million, is more than ever in our history. 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 our current round will end up with us at $600 million in the bank very soon…,” Goyal wrote.
In a regulatory filing made with the Bombay Stock Exchange, InfoEdge, one of Zomato’s early investors said, the company has raised $100 million from Tiger Global Management, and $60 million from Temasek Holdings, at a post-money valuation of $3.3 billion.
“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…,” he added.
On September 3, ET reported that Zomato has racked up around $250 million from new investors like Tiger and Kora Capital — in an ongoing funding round valuing the platform at around $3 billion, according to people aware of the development. While Temasek has invested $62 million, we reported earlier that $100 million each is expected to come from Tiger and Kora, a hedge fund focused on emerging markets.
On the company’s IPO plan, Goyal wrote, “Our finance/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 further said that Zomato’s burn rate had been reducing even as its market share was accelerating in all regions. For the month of July, the company said its monthly burn rate is under $1 million. Zomato has earlier said it is clocking improved unit economics over the past 12 months, and has registered strong recovery of our its food delivery business at 80% of pre-Covid levels, as the broader market bounces back.
Goyal said the company had facilitated the sale of Esops for ex-employees worth $30 million (or Rs 225 crore) to investors. “That’s a lot of meaningful wealth creation we have enabled for our people. On an average, people sold their Esops at a 4x premium to what those shares were allotted to them back in the day,” he added. He said a number of former employees who had started up wanted to sell their shares. “Our IPO is around the corner and waiting a little longer will result in significantly more value creation for all of us.
For Zomato, the new round of financing led by US and Singapore-based financial investors comes amid uncertainty surrounding the India strategy of its prominent backer — China’s Ant Financial. Alibaba’s sister company, Ant, which holds 25% in Zomato, had committed to investing $150 million in January. However, Zomato has been able to access only $50 million so far. The changing stance by Chinese investors such as Ant comes amid a wave of anti-China sentiment sweeping across India and also globally, especially in the US. In addition, India’s new FDI rules introduced in April require regulatory approval for any investment from a country that shares a land border with the country.
Leave a Reply