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Zomato eyes USD 500 million in pre-IPO funding round

Written by Moulishree Srivastava Published on 

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This comes barely a month after the ten-year-old firm announced closing a USD 660 million round at USD 3.9 billion valuation.

Online food ordering and delivery giant Zomato had a busy start to this year.

The Gurugram-based startup is in the process of raising USD 500 million at a valuation of USD 5.5 billion, in what is being considered as a pre-IPO (Initial Public Offering) funding round, as it gears up for public listing this year.

The new funding round entails USD 250 million cash infusion by existing and new investors, and secondary transactions of the same quantum wherein its Chinese backers are likely to offload their shares, a report by local media Economic Times (ET) said, citing sources.

The list of existing backers include Tiger Global Management, Kora Investments, Steadview Capital Management, Fidelity, Bow Wave, and Vy Capital, while Dragoneer Group is a new investor joining Zomato’s cap-table.

This comes barely a month after the ten-year-old firm announced closing the USD 660 million round at a valuation of USD 3.9 billion. With the fresh capital coming in, Zomato would have USD 1 billion in cash ahead of its public market debut.

The company has already appointed Goldman Sachs, Morgan Stanley, Credit Suisse, and Kotak Mahindra Bank to help it list, and is aiming for an IPO by June at a valuation of USD 6 to 8 billion, the ET report added.

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What’s more, the company is already kickstarting its plans for the next phase of growth. According to a local media Entrackr, Zomato has acquired a 100% stake in full-stack sports platform Fitso.

“The deal has been internally announced by Zomato. Fitso’s team along with its co-founders will join Zomato,” the report said, citing sources.

Fitso is an online platform for sporting activities such as swimming, basketball, and tennis, among others. The company partners with sports clubs, gyms, and schools that have play grounds for specific sports as well as swimming pools. The company allows its subscribers to book a time-slot at the nearest sporting ground to play a sports of their choice. The five-year-old startup has so far raised USD 1.7 million in funding from SRI Capital and a bunch of angel investors.

“The size of the deal is in the range of Rs 80-100 crore (USD 11 million to 13.6 million),” said the second person requesting anonymity as the information is still private. “The transaction consists of both equity and cash.”

Last September, it was reported that Zomato is in talks with Fitso to acquire for about USD 20 million. Being in a business that needs people to go out, Fitso had been adversely impacted due to COVID-19. It is likely that Zomato has seized this opportunity to bring a booking platform for fitness activities under its wings for a cheap price, as it looks to get into healthy eating and fitness space.

Last year, Wellversed, a nutrition company started by Indian sportsman Yuvraj Singh acquired Sportfit, a fitness coaching company for an undisclosed sum.

With more millennials willing to splurge money on wellness and staying fit owing to the healthcare pandemic, Zomato is making a bet on this niche segment, where four-year-old Cure.fit is a dominant player.

“It appears to be a smart move by Zomato as most of its users are millennials who can be potential takers of Fitso’s offerings,” the source told Entrackr.

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