Zomato announced plans to raise $1 billion by selling shares to institutional investors as competition grows in India’s quick-commerce market.
This is Zomato’s first major fundraising since its 2021 IPO, and it comes just before its competitor Swiggy’s upcoming IPO, which aims to raise $1.4 billion next month.
Zomato’s move surprised analysts since it already has $1.2 billion in cash. They think the company wants to reduce foreign ownership to under 50%, allowing its quick-commerce unit, Blinkit, to change to an inventory-based model in India.
This change could help Blinkit manage stock more effectively and explore new product categories beyond groceries, as current regulations limit foreign-owned firms.
Zomato’s CEO Deepinder Goyal said the additional funds are necessary due to the “competitive landscape.” He emphasized that quality service is vital for success, despite the need for more capital.
Zomato, which reported a profit of $20.9 million on revenues of $570 million last quarter, faces stiff competition from Swiggy, Zepto, and BigBasket. Zomato leads in quick-commerce, an industry projected to generate over $6.5 billion annually.
The quick-commerce trend, which delivers groceries and other items quickly, is changing how consumers in India shop and disrupting traditional e-commerce models.
Zepto is also looking to raise around $100 million from Indian investors, according to reports.
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