Sequoia Capital sells partial stake in Zomato

Sequoia Capital India is the latest investor to sell its partial stake in publicly-listed food delivery and quick-commerce company Zomato after the mandatory one-year lock-in period since the company’s IPO ended in July 2022. 

Zomato shares closed at Rs 61.90 per share on Friday, down from its previous close of Rs 62.05 per share on BSE. 

Sequoia’s shareholding in the company post the sale will stand at 4.4%, down by 2.01% before the sale. 

Sequoia Capital India will sell 171,904,811 shares with voting rights as part of the transaction. The venture capital firm holds shares in Zomato through two of its funds—Sequoia Capital India Growth Investment Holdings I and Sequoia Capital India Growth Investments II. Sequoia Capital India Investments IV received 45,153,346 incremental shares in Zomato in August 2022 following the acquisition of Blink Commerce, which operates Blinkit. 

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Zomato entered the quick commerce segment with the acquisition of Blinkit in an all-stock deal in June 2022, valuing the company at $626 million. During its recent earnings call, the company lowered the investment guidance for Blinkit to $320 million for breakeven. It has already invested $150 million in order to scale the company. 

Ride-hailing app Uber, which held 7.78% stake in Zomato after it sold its food delivery arm Uber Eats to the company, cashed out on August 3. Another investor, Tiger Global, pared its stakes in Zomato from 5.11% to 2.77% by selling nearly 184,451,928 shares in the company between July 25 to August 2, 2022. 

According to filings made with the exchanges, funds under management of Fidelity International acquired 7,920,206,276 shares in Zomato on August 18, amounting to nearly 5.06% stakes in the company. 

As part of its first-quarter earnings, Zomato CFO Akshant Goyal said that the company was eyeing EBITDA level breakeven by Q4 of FY 2023 or Q2 of FY 2024. The company has also said that it will be staying away from other minority investments.