Foodtech Major Zomato Secures $52Million from Kora, Plans for IPO on Right Track
Foodtech expert Zomato has announced that the firm has raised $52 million from US-based Kora Investments, continuing its efforts to bolster its cash reserves at a time when the food delivery sector is rebounding from the ravages of the coronavirus pandemic. This is the third tranche of Series J round that began in September with a $62 million infusion from Temasek. The capital was raised as part of an ongoing funding round that is expected to raise as much as $600 million. The round has seen Zomato raise more than $270 million so far this year.
Zomato has allotted 12,656 Series J5-1 CCPS to raise the consideration from Kora Investments, shows regulatory filings. Post allotment, Kora commands 1.48 percent stake in the firm. In September, Zomato closed a $62 million funding from MacRitchie Investments, a unit of Singapore state investment arm Temasek, and an additional $103 million from US-based hedge fund Tiger Global.
Kora is expected to make a follow-up investment of a larger amount in Zomato in the coming months, said a person aware of the talks. The person did not disclose the size of the next investment. “Zomato’s current fundraising strategy is to woo more hedge funds for possible investments. Its plan on going public is making it an attractive proposition for these funds since they see faster exits. But whether the foodtech will be able to justify its valuation in the public markets is yet to be seen, hence, investors are taking a moderate approach,” said the person cited above, who didn’t want to be named.
The food tech major may raise more funds from other hedge funds over the next few months, the person said, without elaborating. Deepinder Goyal, Founder & CEO, Zomato told employees in September that the company already has $250 million in the bank (after its fundraise from Tiger Global), and will use the cash reserve as a ‘war-chest’ for future acquisitions, and to fight-off any mischief or price wars from the competition. Deepinder also said that Zomato is likely to go public in the first half of 2021.
In January, Zomato said it is raising $150 million from China’s Ant Financial. However, it has only received $50 million so far given the anti-China chorus and revised FDI norms amid border tensions. In March, it raised $5 million from Pacific Horizon Investment Trust, managed by UK-based Baillie Gifford and Co. Ltd. In comparison, Zomato’s rival Swiggy raised $156 million in the first half of this year from Naspers and a clutch of other investors, valuing it at $3.6 billion.
The ongoing funding round values Gurugram-based Zomato at $3.3 billion. In 2019-20, Zomato doubled its revenue to $394 million, although losses marginally widened to $293 million from $277 million in 2018-19. The Covid-19 pandemic has accelerated Zomato’s journey to profitability. The firm’s food delivery volumes have touched pre-Covid-19 peaks. Deepinder recently said a number of cities are now at over 120 percent of pre-Covid peaks. He said since the end of March, Zomato had delivered a total of 92 million orders.