Tiger Global sells 1.44 percent stake in Zomato for Rs 1,124 crore
Zomato reports Q1 net profit of Rs 2 crore, exceeds market expectations
28 August 2023
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Kunal Tyagi
New York's Tiger Global surprised the financial world by divesting its remaining 1.44% stake in Zomato, the prominent online food delivery platform.
Despite Tiger Global's divestment, Zomato's shares have surged by an impressive 73% over the last six months. Notably, the company's stock closed 1.5% higher at Rs 92.33 on the BSE after the transaction.
Zomato's recent market impact is highlighted by its first quarterly net profit announcement of Rs 2 crore for the April-June quarter. This achievement, surpassing market expectations, solidified the company's reputation as a key player in the food delivery industry.
In a surprising move that has caught the attention of the financial world, New York-based investment firm Tiger Global recently divested its remaining 1.44% stake in Zomato, the popular online food delivery platform. The sale took place in the open market and was executed by Tiger Global's Internet Fund III Pte. The firm successfully sold 12.35 crore shares at a rate of Rs 91.01 per share, resulting in a substantial sum of about Rs 1,124 crore. This move raises the question: what might this mean for the future of Zomato and its investors?
Over the last six months, Zomato's stock has experienced an impressive 73% surge, which has undoubtedly caught the attention of many investors. Despite the divestment, the company's shares ended 1.5% higher at Rs 92.33 on the BSE, underscoring the sustained interest in the platform. It's worth noting that the recent buyers of Zomato's shares include several heavyweights in the financial sector, such as Morgan Stanley, Goldman Sachs, Societe Generale, BNP Paribas, Kotak Mahindra Mutual Fund, and Axis Mutual Fund.
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Interestingly, a significant chunk of Zomato's shares was initially held by venture capital giants SoftBank Vision Fund, Tiger Global, and Sequoia Capital India (now Peak XV Partners). The company had issued 62.9 crore shares during its acquisition of Blinkit, thereby securing a 6.88% stake on a fully-diluted basis. Notably, the acquisition led to a negotiated 12-month lock-in period for these shares, surpassing the typical statutory lock-in period of six months.
Zomato has been making waves in the market lately, most notably with its first quarterly net profit announcement of Rs 2 crore for the April-June quarter. This impressive performance exceeded market expectations and added to the company's credibility as a strong player in the food delivery industry. Brokerage firm Jefferies provided insights into Zomato's performance, reporting an average order value of Rs 421 for the food delivery business during the April-June period, marking a 7% increase from the previous year. Additionally, the firm estimated Zomato's total take rate to be approximately 23.8%, with restaurants contributing 18.7% and customers contributing 5.1%.
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