Alibaba, which owns around a 13 percent stake in restaurant aggregator and meal delivery company Zomato through two of its subsidiaries, would sell $200 million in shares in a block auction on November 30, according to CNBC Awaaz on November 29.
According to the report, Ant Financial and Alipay would reduce their investment in Zomato to around 10%. According to the article, the block deal will take place at a 5-6 percent discount. Morgan Stanley would act as the deal’s broker.
Alibaba’s partial withdrawal comes at a time when Zomato has experienced a string of senior-level departures. The corporation has also begun layoffs as part of its strategy to reduce its personnel by 4%. Zomato’s stock has dropped more than 55% this year, despite the company’s recent revenue growth.
More in Detail
Alibaba has become the latest investor to sell Zomato shares in bulk since the one-year lock-in period for about 613 crore shares, or 78 percent of the company’s capital, expired on July 23. Some of the largest shareholders, including Sequoia Capital India, Tiger Global Management, Uber, and Delivery Hero, reduced their stakes in August through block deals or open market operations.
Sequoia Capital India Growth Investment Holdings I and SCI Growth Investments II sold 6.7 crore shares between September 6, 2021 and October 14, 2021 and 10.5 crore shares between June 27, 2022 and August 25, 2022, according to a stock exchange filing in the last week of August.
Delivery Hero, which owned approximately 1.6 percent of the food delivery startup, sold its entire interest on the open market in July for $60 million. Uber also sold its entire 7.78 percent investment in the Gurugram-based company, thereby exiting the Indian food delivery business.
Moore Strategic Ventures, a New York-based venture capital firm, sold its entire ownership of 4.25 crore shares in a block deal in July for Rs 44 each, incurring a Rs 4 crore loss. The block deal comes months after Zomato’s one-year lock-in period for pre-IPO stockholders expires on June 23, 2022. The conclusion of the lock-in period increases the market supply of tradeable Zomato shares.
Zomato raised $9,375 crore in an IPO at an issue price of 76 per share. It went public on the stock exchanges on July 23, last year. Zomato closed 1.63 percent down on the National Stock Exchange at Rs 63.35. Similar block deals have occurred in numerous tech enterprises such as Nykaa, Paytm, and Policy bazaar.
Results and Prices
The stock peaked at 159.75 in November 2021 and has been falling since then, amid a global carnage in technology stocks caused by rising interest rates and foreign investors fleeing emerging market equities, resulting in a sharp slowdown in the availability of easy money that had helped tech companies grow at a breakneck pace.
Zomato reported a modest second-quarter loss earlier this month, as the number and value of its online orders increased. Revenue from operations grew to 1,661.3 crores in the July-September quarter, up from 1,024.2 crores in the same time the previous fiscal year.
The company also stated that this is the first quarter in which it has surpassed the billion-dollar annualized revenue mark. However, its total expenses increased to 2,091.3 crores during the period under review.
More about Zomato
Zomato is an Indian multinational restaurant aggregator and food delivery startup created in 2008 by Deepinder Goyal and Pankaj Chaddah. Zomato provides restaurant information, menus, and user ratings, as well as food delivery services from partner restaurants in various cities. As of 2019, the service is offered in 24 countries and over 10,000 cities.
Deepinder Goyal and Pankaj Chaddah of Bain & Company founded Zomato in 2008 as FoodieBay. The website began as a listing and recommendation portal for restaurants. Zomato created zomato.xxx, a site dedicated to food porn, with the introduction of.xxx domains in 2011.
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