Zomato shareholders approve ₹8,500 crore fundraise through QIP to boost cash reserves

Food delivery aggregator Zomato Ltd on Saturday (November 23) announced that its shareholders have approved its proposal to raise capital through a qualified institutional placement (QIP). Approval was obtained by special resolution adopted by mail ballot conducted via remote electronic voting.

Last month, Zomato’s board approved raising up to ₹8,500 crore through qualified institutional placement (QIP). For now, fundraising is aimed at strengthening the balance sheet, the company said in a statement.

Zomato said its cash balance fell by ₹1,726 crore from the previous quarter due to the review of a ₹2,014 crore deal to acquire Paytm’s entertainment ticketing business.

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“Our cash balance has declined from ₹14,400 crore to approximately ₹10,800 crore (mainly due to funding of historical rapid commercial losses as well as certain equity investments and acquisitions),” it said.

While the business is now cash generating (compared to a loss-making business at the time of the IPO), the company believes it needs to grow its cash balance given the competitive environment and the much larger scale of our business today.

“We believe that capital alone does not entitle anyone to win (and that quality of service is a key determinant of success), but we want to ensure that we are on a level playing field with our competitors who continue to raise additional funds. capital,” the statement says.

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The food delivery aggregator confirmed that the fast commerce business continues to operate at near-adjusted EBITDA break-even and the profitability of the food delivery business continues to be stable. In addition, the company said it does not plan any minority investments or acquisitions.

Based on the current shareholding structure, Zomato’s current foreign stake is 50.48%, with 5.25% classified as foreign direct investment (FDI) and the rest as FII.

On November 22, Zomato Ltd shares closed at ₹264.15, down ₹2.60 or 0.97% on the BSE.

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