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Zomato initiates closure of $500M pre-IPO funding round at 5.5B valuation

Zomato

Source: NDTV Gadgets 360

The Gurugram-based online food delivery start-up and restaurant guide that allows users to order food online through their platform, Zomato has become of the largest food delivery services in the country, backed by well-known global investors.

Amidst the talks of listing itself for an Initial Public Offering this year, Zomato has recently begun closure of funding round worth USD 500 million which can be considered as the company’s pre-IPO financing round, leaving the start-up at a USD 5.5 billion valuation.

As mentioned in a report by Economic times, existing investors including Tiger Global Management. Hong King-based Steadview Capital, Kora Investments, Fidelity, Vy Capital, Bow Wave and Dragoneer Investment Group which is a new entrant in the list of investors have been known to participate in the food delivery platform’s latest funding round.

Ant Group along with other Chinese investor, Sunlight Fund have also infused approximately USD 250 million by way of secondary sale of shares in Zomato’s Pre-IPO financing round. This investment could be a controversy considering the geopolitical tensions between India and China, as mentioned by the Economic Times. On the other hand, existing investors along with a few new entrants have also invested a fairly similar amount in the form of primary cash.

There have been several reports in the recent past which say that Zomato is in talks to file for an Initial Public Offering this year. Speculations suggest that Zomato may announce an IPO in the month of June but there has not been any official confirmation about the same. Sources suggest that Zomato’s public market debut can be driven by Morgan Stanley, Credit Suisse, Goldman Sachs and Kotak Mahindra Bank.

The investments from Chinese investors may bring uncalled problems in the company’s funding plans for the future. Where the government of India is accusing the Chinese of national security threats to India and banning applications, a major change that has directly affected Zomato. New Foreign Direct Investment rules and regulations enforced by the government last year became a massive roadblock for the food delivery company. Zomato was committed USD 150 million by Ant Group but due to these new regulations, only USD 50 million could pass through. Since then, Ant Group and parent organisation, Alibaba Group have been withdrawing from investing in India and according to a report by Economic Times, have also sold partial stakes in BigBasket and Zomato.

In totality, Zomato is currently invested by 21 investors out of which Mirae Asset ventures and Luxor Capital Group are the most recent additions.

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