Zomato shareholders approve ₹8,500 crore fundraise via QIP to bolster cash reserves
Last month, the Zomato board approved raising up to ₹8,500 crore through a qualified institutions placement (QIP). The fundraising is meant to strengthen the balance sheet at this point, the company said in a filing.
Zomato said its cash balance was reduced by ₹1,726 crore, compared to the previous quarter on account of the deal consideration of ₹2,014 crore for the acquisition of Paytm’s entertainment ticketing business.
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“Our cash balance has reduced from ₹14,400 crore to about ₹10,800 crore (mainly on account of funding past quick commerce losses and some equity investments and acquisitions),” it said.
While the business is now generating cash (vis-a-vis a loss-making business at the time of IPO), the company believes that it needs to enhance its cash balance given the competitive landscape and the much larger scale of our business today.
“We believe that capital by itself does not give anyone the right to win (and that service quality is the 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 capital,” it said.
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The food delivery aggregator reiterated that the quick commerce business continues to operate at near adjusted EBITDA break-even and that its food delivery business margins continue to remain steady. Additionally, the company said that there is also no plan for any minority investments or acquisitions.
Based on its current shareholding pattern, the current foreign holding for Zomato stands at 50.48%, with 5.25% classified as Foreign Direct Investment (FDI) and the rest as FII.
On November 22, shares of Zomato Ltd ended at ₹264.15, down by ₹2.60, or 0.97% on the BSE.
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