Tiger Global latest to trim stake in India's Zomato after lock-in period expires

Photo: Zomato

On yet another eventful day for India’s Zomato, hedge fund Tiger Global cut its stake by almost half in the food delivery startup, less than two weeks after the lock-in period for pre-IPO investors ended.

Tiger Global’s investment vehicle Internet Fund IV held a 5.11% stake in Zomato before the lock-in ended, which is now reduced to 2.77%.

This comes at a time when Tiger Global has reduced its stake in Indian companies and has started focussing mostly on early-stage startups. According to data from Venture Intelligence, Tiger Global’s investment in India fell from $1.92 billion in the second half of 2021 to $0.74 billion in the first half of 2022, as the global hedge fund is struggling with mounting losses.

The stake sale by Tiger Global comes a day after ride-hailing platform Uber Technologies divested its 7.78% stake in the company. Uber had received a stake in Zomato when it sold off its Indian food delivery arm, Uber Eats, in a stock transaction in 2020.

Just a day before offloading its stake, Uber posted a quarterly net loss of $2.6 billion, largely hurt by investments in companies such as Zomato. As per Reuters calculations, its stake sale in Zomato was worth $392 million.

The bulk of the offloaded shares by Uber was picked up by Fidelity Investment Trust Fidelity Series Emerging Markets Opportunities Fund, which bought 5.44 crore shares for Rs 50.26 apiece, stock exchange data showed. ICICI Prudential Life Insurance bought 4.5 crore shares at a price of Rs 50.25 apiece.

Amid large sell-off pressure on the Zomato stock last week, venture capital firm Moore Strategic Ventures exited its entire holding of 4.25 crore shares in the company at a loss, sending its shares tanking.

Expand Table

Recent shareholder activity in Zomato

ShareholderBuy/SellStake/Shares involved      
Moore Strategic VenturesSold4.25 crore shares
Uber Technologies Sold 7.78 %
Tiger GlobalSold0.0234
Fidelity Investment Trust Fidelity Series Emerging Markets Opportunities FundBought5.44 crore shares
ICICI Prudential Life InsuranceBought4.5 crore shares

However, in the company’s latest quarterly report, Zomato said its quarterly net loss nearly halved, bringing some respite to investors.

“These three events, (sale of 2.34% stake by Tiger Global, sale of 7.8% stake by Uber and the narrowing losses) in the space of last 7-10 days shows that even at a price of Rs48-53, Zomato is attracting institutional investors. In my view, this is very positive and encouraging for Zomato,” Prabhudas Lilladher Capital Market Executive Director-Investment Banking Dara Kalyaniwala told DealStreetAsia.

“Personally, I would like to see at least the next quarter results [when a part of the festival season is accounted for] before considering Zomato for investment by non-institutional investors,” Kalyaniwala added.

From a record low of Rs41.65, the company recovered over one-third of its losses, to close at Rs. 56.80 on Thursday.

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