Zomato’s board approved plans on Tuesday to raise Rs 8,500 crore through the qualified institutional placement (QIP) route, according to a stock exchange filing.
Founder and CEO Deepinder Goyal explained that Zomato aims to strengthen its cash reserves, given the current competitive market.
“While the business is now generating cash (vis-a-vis a loss making business at the time of IPO), we believe that we need to enhance our cash balance given the competitive landscape and the much larger scale of our business today,” Goyal said in the company’s shareholders letter.
“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,” he added.
Meanwhile, Swiggy, Zomato’s main competitor in food delivery and quick commerce, plans to launch an initial public offering of $1.25 billion soon. Additionally, Mumbai-based Zepto, which competes with Zomato’s Blinkit in quick commerce, has raised over $1 billion in the last four months due to strong investor interest in fast delivery services.
