Zomato picks up $104 million, to go public in 2021

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September 11, 2020 3:15 AM

Goyal said the company had no immediate plans on how to spend the money. “We are treating this cash as a ‘war-chest’ for future M&A, and fighting off any mischief or price wars from our competition in various areas of our business.”

Zomato’s ebitda losses increased slightly to $293 million in FY20 from $277 million in FY19 while revenues went up 105% to $394 million.Zomato’s ebitda losses increased slightly to $293 million in FY20 from $277 million in FY19 while revenues went up 105% to $394 million.

Food delivery player Zomato, which has raised $104 million in a fresh round, plans to go public sometime in the first half of 2021, founder & CEO Deepinder Goyal said in an internal mail to employees on Thursday. “We have raised a lot of money, and today, our cash in the bank of around $250 million is more than ever in our history. We estimate that our current round will end up with us at $600 million in the bank very soon,” Goyal wrote.

Regulatory filings sourced from business platforms Tofler and paper.vc showed Zomato has raised a fresh `760 crore ($103.45 million) from Tiger Global, Baillie Gifford and Ant Financial as part of the series J financing round. A few others, such as Kora Management, are also expected to participate in this round. Last week, the Gurgaon-based firm raised $62.44 million from existing investor Temasek and with the latest infusion, Zomato has now raised some $1 billion. Rival Swiggy has raised about $156 million in two tranches so far this year and attracted a total investment of $1.64 billion.

Goyal said the company had no immediate plans on how to spend the money. “We are treating this cash as a ‘war-chest’ for future M&A, and fighting off any mischief or price wars from our competition in various areas of our business.”

The CEO claimed the burn rate was very low and that market share was accelerating in all regions. “We are doing some of our best work without burning a hole in our pocket, and we should continue to do so,” he said. Zomato’s ebitda losses increased slightly to $293 million in FY20 from $277 million in FY19 while revenues went up 105% to $394 million.

However, business is recovering from the March lows. In July, the firm said the monthly burn rate would be below $1 million with the GMV (gross merchandise value) for the food delivery business recovering to nearly 60% of pre-Covid levels from a two-year low in the last week of March.“While Covid-19 has impacted the size of our business, it has accelerated our journey to profitability,” the firm had said then.

Given how tough the business is, analysts reckon less than a handful of players will survive. HSBC analysts estimate India’s food delivery could be valued at about $30 billion in the long term in a blue-sky scenario. Delivery volumes, they point out, are currently less than 1/20th of volumes in mainland China volumes. Moreover, in terms of market place and pure-play delivery, India remains predominantly a delivery market, which has lower margins than the marketplace model. In comparison, China’s Meituan derives 35% of its volumes from the marketplace channel. Earlier this year, Zomato bought the India Eats business from Uber.

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