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    Zomato closes $250 million funding round at $5.4 billion valuation

    Synopsis

    Zomato has benefited from a revival in the online food ordering sector after a few tough months last year due to the nationwide lockdown, imposed to check the spread of the Covid-19 pandemic.

    ETtech
    Illustration: Rahul Awasthi
    Zomato has closed a $250 million funding round, led by existing investors Tiger Global, Kora and Fidelity.

    The primary financing values the food delivery app at $5.4 billion post-money, from about $3.9 billion in December when it had raised $660 million.
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    Kora has pumped in $115 million, while Fidelity has contributed $55 million and Tiger Global has invested $50 million, Info Edge – Zomato’s largest shareholder – said in a stock market filing.

    Bow Wave also invested $20 million, while Dragoneer Investment chipped in with $10 million, according to the disclosure. With this fundraising, Info Edge said it now owns an 18.4% stake in the Gurugram-based firm.

    ET was the first to report last month that the online food delivery platform was closing a $500 million fundraise in what was being widely regarded as a pre-IPO funding round.

    The capital raising was expected to comprise a mix of primary cash infusion of $250 million and a similar amount by way of secondary share sales by Chinese investors Ant Group and Sunlight Fund, amid heightened geopolitical tension between India and China.

    The fresh infusion of capital will help Zomato keep aside $1 billion in cash, as it inches closer to a public market debut, a person familiar with the developments had told ET.

    Investors have been buoyed by Zomato’s prospects following the highly successful IPO of SoftBank-backed DoorDash in December, when the US-based food-delivery startup opened trading at $182, about 78% higher that its IPO price, on the New York Stock Exchange.

    DoorDash, which raised around $3.4 billion, was valued at $34.2 billion, more than double the $15 billion valuation it commanded in the private market a year ago. On Monday, DoorDash’s market cap stood at $56.7 billion.

    Zomato and rival Swiggy have benefited from a revival in the online food ordering sector after a few tough months last year due to the nationwide lockdown, imposed to check the spread of the Covid-19 pandemic.

    Zomato chief executive Deepinder Goyal had said while announcing its earlier $660 million fundraise that the company was on track to record its best-ever monthly sales in December. “We are now clocking around 25% higher GMV (gross merchandise value) than our previous peaks in February 2020," he had tweeted. "The tailwinds for food delivery businesses are clearly visible, and we believe that the growth of the sector will accelerate post-vaccine."

    On Tuesday, ET reported that the firm has restarted hiring, less than a year after it laid off 13% of its workforce to save on costs.

    Swiggy is also in advanced negotiations to close a $700-$800 million funding round led by sovereign wealth funds Qatar Investment Authority with participation from GIC of Singapore as well as global alternative asset manager Falcon Edge, ET reported earlier this month.
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