The Gurugram-based company is raising the primary capital at a pre-money valuation of $3 billion, its other investor Info Edge (India) Ltd said in a BSE filing on Friday. Upon closing of this financing, Info Edge’s shareholding in Zomato will reduce to about 25.13 per cent on a fully converted and diluted basis, it added.
Zomato has been in talks with Ant Financial and Singapore state investment firm Temasek to raise a larger round of $600 million. The funding at this point in time was imperative to help Zomato stay in the game and fend off competitor Swiggy.
Zomato was valued at about $2 billion when it last raised funding. The company concluded raising about $315 million as past of its Series J funding in March last year with participation from Delivery Hero and Glade Brook Capital.
Ant Financial had contributed $210 million in the first tranche of Series J in October 2018. The transaction saw Info Edge’s shareholding in Zomato come down to about 27.68 per cent on a fully converted and diluted basis from 30.91 per cent. The Chinese investor had also pumped in $200 million in Zomato’s Series I round in February 2018. Zomato also counts Sequoia Capital india, Temasek Holdings, and Vy Capital among its list of backers.
With the Indian online food delivery market estimated to touch $12.53 billion by 2023, both Zomato and Swiggy are increasing spends to grab a larger share.
Last year, Zomato suspended its Infinity Dining programme, which allowed subscribers to order unlimited food and beverages at a set price from the menu of partner restaurants for a limited period of time. The suspension followed protests from partner restaurants against the deep and unsustainable discounting.
The company also laid off around 541 employees across its customer support team in Gurugram last year, stating improvement in technology in areas such as after-sales support and other customer support-related functions.
Meanwhile, Swiggy has expanded its offerings beyond food delivery with Swiggy Stores and Swiggy Go. The company is also looking to enter the Indian digital payments space to cash in on its fast-growing customer base and high repeat usage.
Swiggy is also in advanced stages of closing a $700-750-million round that is slated to be led by existing investor Naspers.