Food delivery aggregator Zomato Ltd. will be holding its board meeting on Tuesday, October 22 to consider a fund raising proposal through an institutional share sale or a Qualified Institutional Placement (QIP).

Sources with knowledge of the matter told CNBC-TV18 that the company is likely to approve a fund raise worth ₹8,500 crore through its board meeting.

Post the fund raising, the company will apply to the Reserve Bank of India to cap its Foreign Institutional Investment (FII) holding at 49%, the sources said.

CNBC-TV18 has written to the company on the same and is awaiting a response.
Zomato will also be considering its September quarter results on October 22.

Based on its current shareholding pattern, the current foreign holding for Zomato stands at 50.48%, with 5.25% classified as Foreign Direct Investment (FDI) and the rest as FII.

“A company that is completely catering to quick commerce, which is a 10-minute delivery or a five-minute delivery at the doorstep of the household, and has the potential and the capacity to meet that promise and does not do things wrong then there is enough potential for this company to grow, and the funding, the shareholding pattern, the source of the funding, simply then follow. That is how I have seen in many conversations I have had with companies in the quick commerce space,” Anil Talreja, Partner at Deloitte India said.

Zomato’s cash balance at the end of the June quarter stood at ₹12,539 crore but that was before the company signed definitive agreements to acquire Paytm’s entertainment ticketing business for ₹2,048 crore.

“If you are Indian owned and controlled then whatever downstream transactions you do, which is like when you are buying any subsidiaries or other businesses under you, that is not subject to the FDI restrictions. So, this limit gives flexibility to a company to be able to then explore sectors which may have greater FDI restrictions, or FDI regulations because then you are treated as if you are doing investment as an Indian. The moment you pass the control to foreign investors that flexibility goes away. Maybe that is possibly one of the intents,” Moin Ladha, Partner, Khaitan & Co said.

Shares of Zomato are currently trading 3.7% lower on Friday at ₹260.65. The stock is up over 6x from its all-time low of ₹40, has more than doubled in value so far in 2024 with gains of 110% and is up 130% in the last 21 months.