Indian food delivery app Zomato has made a significant move in the financial arena by raising $1 billion from institutional investors. This comes after its 2021 IPO and marks a crucial milestone in its growth journey. The food delivery and quick-commerce behemoth issued approximately 336.5 million shares priced at ₹252.62 each ($3) through a qualified institutional placement. This strategic fundraising saw strong participation from leading Indian mutual funds, with Motilal Oswal emerging as the largest investor, securing 20.81% of the shares. ICICI Prudential’s funds also played a significant role, acquiring 12.78%, while HDFC and Kotak funds followed with 8.68% and 5.95% respectively.

Strategic Shift in Zomato's Status

The $1 billion fundraise has strategically transformed Zomato's status to that of a "domestic" company. By pushing its foreign ownership below 50%, Zomato can now adopt an inventory-led model for its quick-commerce unit, Blinkit. This model gives the company direct control over products and warehousing, opening up new avenues for growth. It's a move that positions Zomato well in the highly competitive quick-commerce market.The timing of this capital raise is also highly strategic. Just weeks after rival Swiggy's $1.35 billion IPO, Zomato has managed to secure a substantial amount of funds. This shows its determination to stay ahead in the race and maintain its competitive edge. Another leading quick-commerce startup, Zepto, also secured $350 million this month in a deal brokered by Motilal Oswal.Shares of Swiggy were down 4.1% on Friday, capping this week's overall rally at 12.8%. Zomato's shares, offered to investors participating in the share placement at a 5% discount, were down roughly 1% on Friday but still remain up 127.7% year-to-date. With a market cap of about $30 billion, Zomato is clearly a force to be reckoned with.