Investors in Zomato Accept a QIP Proposal of INR 8,500 Crore

Nitin Konde, Varun Bhardwaj

Nov 26, 2024 — 3 min read

Zomato Investors Approve INR 8,500 Crore QIP Proposal

A month after receiving board permission, foodtech giant Zomato has received shareholder approval to raise INR 8,500 Cr (about $1 billion) through a qualified institutional placement (QIP). The resolution was approved by about 99.79% of the shareholders. This follows the company's announcement last month of a postal ballot requesting Zomato's shareholders' approval.

Zomato stated in an exchange filing on November 23 that the aforementioned notice was sent electronically on October 23, 2024, to all of the company's members whose names are listed in the depositories' register of members/register of beneficial owners as of October 18, 2024 ("Cut-off date") and whose email addresses are on file with the company.

The Move is Aligned with the Regulations of Ministry of Corporate Affairs and SEBI

The business also stated that it complied with Securities and Exchange Board of India (SEBI) and Ministry of Corporate Affairs rules. In addition, other special resolutions, such as the implementation of multiple ESOPs (2018, 2021, 2022, and 2024) and interest-free loans to the Foodie Bay Employees ESOP Trust, were approved in the scrutiniser's report, which summarises the results of Zomato's postal ballot on November 22.

According to reports earlier this month, the foodtech company plans to launch its INR 8,500 Cr QIP in December. Morgan Stanley has been chosen as the investment bank for the QIP, and it is still looking to add one or two other investment banks to the fundraise.

Establishing Fund Raising Committee

Zomato added that in order to determine the QIP's structure, issuance method, pricing, discounts, and terms and conditions, the board established a fund-raising committee. Given that its cash reserve dropped to INR 1,726 Cr at the end of the September 2024 quarter due to an INR 2,048 Cr investment for the purchase of Paytm's entertainment ticketing business, the company is hoping to improve its cash balance with this given the competitive environment and the significantly larger scope of the company's operations today, the company feels that it needs to improve its cash balance. Deepinder Goyal, the founder and CEO of Zomato, went on to say that the company wants to make sure it is on an even playing field with its rivals, who are constantly raising more money, but it also believes that capital alone does not grant anyone the right to win (and that service quality is the key determinant of success).

According to Goyal, the business does not intend to use the money for acquisitions or minority investments. For the September quarter of 2024, Zomato's consolidated net profit increased 389% year over year (YoY) to INR 176 Cr, driven by strong growth in its rapid commerce division, Blinkit. Zomato is anticipated to use the money raised from its QIP fundraising to grow Blinkit's network of dark stores at a time when competition in the rapid commerce space is getting fiercer. In the meantime, its rivals in the industry have adequate funding as well. After an initial public offering (IPO) valued at more than INR 11,000 Cr, Zomato's competitor Swiggy, which runs Instamart, went public on November 13. In less than three months earlier this year, Zepto raised almost $1 billion to expand its network.