Zomato Enters Online Grocery Space With Major Investment In Grofers: How Will It Work Out?
Zomato will invest $100 million in Grofers and start its own grocery delivery service.
In a statement, chief financial officer Akshant Goyal said that the brand is experimenting in the under-penetrated space which presents a large opportunity and growth potential.
With the investment, it will increase its exposure in grocery delivery and will roll out a grocery marketplace on its platform as a trial.
It had launched an e-grocery business in 2020 but failed to find success due to immense competition from Swiggy, BigBasket, and others.
Tata Digital is also entering the fray after acquiring a majority stake in BigBasket.
However, it is undefined whether they will fully buy out the grocery delivery company.
This announcement comes in the backdrop of its first IPO launch on July 14.
Each share will cost Rs 72-76 and it hopes to raise Rs 9,375 crore through the share sale.
It will close on July 16 and will succeed SBI Cards and Payments System’s offer worth Rs 10,355 crore in March 2020 to become the largest offer.
It has also reserved 65 lakh shares for its employees.
Reason Behind IPO Decision
It said it made sense to go public being developed domestically and enjoying customer popularity.
It has plans to invest more in customer acquisition which will help with its retail participation.
Its post-money valuation at the upper band will be Rs 64,365 crore.
This valuation reflects the brand’s present business strength and its future potential.
Zomato’s growth drivers in the future will be both organic and inorganic, as it is not particularly focused on any one channel of growth and would rather do “whatever makes sense”.
Gaurav Gupta, Zomato co-founder, said that they will keep optimising both the drivers and improve on their economics like it has done the last 2-3 years.