Exclusive: Zomato set to raise around $70 Mn from Temasek; allot ESOPs worth $52 Mn

Zomato is on the verge of raising a new funding round from Temasek. The contours of the deal have been finalised and regulatory filings hint that the company would raise anywhere up to $72 million from the Singapore government-owned investment firm.

The capital would provide a sigh of relief to the Gurugram-based foodtech firm that has been unable to receive $150 million from Ant Financial due to a ban of foreign direct investment under the automatic route from countries that share a border with India. 

Zomato was supposed to receive capital from Ant Financials, but the new FDI rule has delayed the process, leaving the company in search of a new source of capital. According to regulatory filings, Zomato is set to allot 15,188 preference shares to Temasek’s subsidiary MacRitchie Investments to raise somewhere between $60-$72 million.

The company is also allotting 12,015 equity shares to its employees’ ESOP trust through its CFO Akriti Chopra who acts as the trustee. The company will allot the stocks at a discounted issue price of Rs 1.53 lakh per share.

If subscribed completely, the ESOP subscription scheme will bring in $25 million (Rs 184.2 crore) for Zomato and post allotment the ESOP trust will control 6.77% stake in the foodtech company on a fully diluted basis.

It’s worth noting that Zomato last raised external capital from Pacific HorozonTrust by allotting 1,177 J2 series shares at an issue price of Rs 3.23 lakh per share, hence fresh ESOP allotment is worth nearly $52 million.

Entrackr’s immediate queries remained unanswered until the publication of this story. We will update the story as and when they respond. In June, ET had reported that Temasek may invest $100 million in Zomato.

Akin to other businesses, food delivery has been hit hard by the Covid-19 pandemic. Zomato and its rival Swiggy were working below 10-15% of their pre-Covid peak during the two-month-long nationwide lockdown. 

The two, however, now bounced back with 50-60% of their loss in volume.

Zomato had also laid off over 500 employees and snipped salaries to control burn and conserve resources for a longer runway. Although, the firm did reinstate the previous salary structure for the impacted employees in July.

In 2020, Zomato had received a $5 million infusion from Pacific Horizon Investment Trust, which is managed by Baillie Gifford & Co Limited. Fintrackr’s estimate showed that it had crossed a $3.25 billion valuation mark at that time.

To focus on its core business, Zomato has also been scaling down its grocery business - Zomato Market. It had also held a conversation with Grofers for a potential merger but talks didn’t move ahead for unknown reasons.

The Deepinder Goyal-led company had also acquired Uber’s food delivery business UberEats in a stock deal worth $206 million. 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.