IPO-bound Zomato lines up $140 mn payout for early investors, employees

Food technology startup Zomato has closed a $660 million growth round of funding, valuing the company at $3.9 billion. 

Dubbed a pre-IPO round,  it will also see a secondary component of $140 million, of which $30 million was used to provide liquidity for employee stock options in September. Secondary transactions involve existing investors selling their stake to a third party buyer or other investors. 

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Deepinder Goyal, CEO of the Gurugram-based startup, on Friday announced on Twitter that 10 new investors had participated in the round since the first tranche was raised in January. The startup has received capital from new investors Tiger Global, Kora Management, Luxor Capital Group, Mirae Asset, Steadview Capital, Baillie Gifford, Fidelity Management and Research, Bow Wave Capital and D1 Capital in the round. 

Food delivery in India is rapidly coming out of COVID-19 shadows. December 2020 is expected to be the highest ever GMV month in our history. We are now clocking ~25% higher GMV than our previous peaks in February 2020.
1/n

— Deepinder Goyal (@deepigoyal) December 18, 2020

Apart from the $62 million from returning investor Temasek, the startup has received $50 million of the committed $150 million from Alibaba Group’s finance entity Ant Financial as part of the same round. The investment from the Chinese firm has been in a limbo due to the changes in Foreign Direct Investment (FDI) policy made in April, on the back of geo-political tensions with China. Alibaba Group officially hit a pause on India investments in August.

The startup has raised over $1.1 billion across multiple rounds since its inception in 2008, as per VCCEdge data.

In a separate filing, early investor Info Edge listed out a primary transaction of $253.4 million as part of the round, bringing down the Naukri parent’s stake in Zomato to 19.3%. 

In November 2019, Info Edge had hinted at a possible participation in a secondary transaction at Zomato, provided the company broke even by May 2020. It is unclear whether the plan stands given the impact of Covid-19 on the food technology players.

Detailed email queries sent to Zomato on the secondary transaction remained unanswered till the time of publishing the article. 

In his tweet, Goyal mentioned that the company recorded the highest gross merchandise value (GMV) for the month of December 2020, 25% higher than February 2020 or pre-Covid benchmark.