Zomato inches closer to Swiggy’s valuation at $3.25 Bn in fresh round

Zomato has crossed the $3.25 billion valuation mark in its fresh fund infusion from  Scotland-based Pacific Horizon Investment Trust. The new valuation narrows the gap between the two local food delivery majors — Swiggy and Zomato. 

The Naspers-backed firm was valued at $3.6 billion in its $113 million Series I round in February. In terms of valuation, Swiggy is now only $350 million ahead of Zomato. 

Regulatory filings reveal that Zomato has allotted 1,177 Series J2 compulsorily convertible preference shares at $ 4,245.56 per share to raise $5 million (Rs 38.02 crore) from Pacific Horizon Investment Trust, which is managed by Baillie Gifford & Co Limited.

According to Entrackr’s back-of-the-envelope calculation, the company’s estimated valuation has touched $3.25 billion mark.

Earlier in January, the company had issued 11,777 Class J CCCPS to raise $50 million from Ant Financials at the same valuation. It’s worth noting that several media reports had surfaced about Zomato closing $150 million from Ant. However, there were no documents filed for the remaining $100 million.

The fresh funding round for Zomato has come at a time when food delivery companies have been facing a 70% decrease in order volumes. According to an ET report, Swiggy and Zomato volumes together have fallen to under one million from a peak of 2.5 million deliveries a day.

The Deepinder Goyal-led firm just recently forayed into grocery via Zomato Market to compete holistically with Swiggy at a time when online grocery orders have seen a spike due to the Covid-19-induced lockdown. Swiggy started offering grocery delivery about 15 months ago through Swiggy Stores.

Zomato also acquired the India business of Uber Eats in an all stock deal for $206 million earlier this year. While the transaction was valued at $171 million, the remaining $35 million was received as a reimbursement of goods and services tax receivable from Zomato.

Akin to other businesses, the food delivery business has been hit hard because of a countrywide lockdown alongside the fear of contracting the coronavirus among delivery personnel. Zomato had launched several initiatives such as offering loans to restaurants, provisioning support to the restaurant workers and feeding poor and stranded people.