Zomato valuation crosses $3.9 billion after closing $660-million financing

The company CEO said marquee global investors share the company's enthusiasm about the future of this business

Food delivery giant Zomato has closed a $660 million primary financing round at a post-money valuation of $3.9 billion. This is an increase from its previous valuation of $3.6 billion. Ten new investors are joining the Gurugram-based unicorn. This list includes Tiger Global, Kora, Luxor, Fidelity (FMR), D1 Capital, Baillie Gifford, Mirae, and Steadview.

“On top of this $660 million, we are in the process of closing a $140 million secondary transaction,” tweeted Zomato co-founder and CEO Deepinder Goyal on Friday night. “As part of this transaction, we have already provided liquidity worth $30 million to our ex-employees.” 

He said marquee global investors share the company’s enthusiasm about the future of this business. 

The Covid-19 pandemic has accelerated Zomato’s journey to profitability. Goyal said food delivery in India is rapidly coming out of Covid-19 shadows. December 2020 is expected to be the highest ever GMV (gross merchandise value) month in Zomato’s history. “We are now clocking (about) 25 per cent higher GMV than our previous peaks in February 2020,” said Goyal. “The tailwinds for food delivery businesses are clearly visible, and we believe that the growth of the sector will accelerate post-vaccine.”

Acknowledging the role played by ex-employees who have been provided liquidity worth $30 million, Goyal said he is grateful for their contribution in building Zomato. “I am glad that we created some wealth for these super amazing people,” said Goyal.

He said a number of these “ex-zomans” are busy working on their own startups and will not need to raise seed capital from external investors.

“I am supremely excited about what lies ahead and the impact that we will create for our customers, delivery partners, and restaurant partners,” said Goyal.

According to the analysts, Zomato is on a fund-raising spree as the company is preparing for a public listing next year, focusing on profitability and new business segments.The funding is also expected to help Zomato compete with its rival Swiggy and Amazon which forayed into the food delivery business in India this year. 

The food ordering business is making a strong comeback after the initial setback of the ongoing pandemic. Zomato has delivered over 150 million orders since the first lockdown started in March. It had said there have been zero reported cases of Covid transmission through food or its packaging.

Info Edge (India), which is an existing shareholder in Zomato, recently said that the food delivery aggregator has raised $195 million (about Rs 1,455.4 crore) in funding from six investors, including Luxor, Kora, and Steadview, valuing the online food ordering platform at $3.6 billion.

Analysts said Zomato may target a valuation of about $7 billion for its listing.