According to the sources, Uber Technologies sold 612 million shares through a series of block agreements on August 3rd, 2022, therefore reducing its 7.8% ownership position in the meal delivery service Zomato to zero. The American mobility service company raised over $390 million, or 3,088 crores, at a profit of almost 100%.
Zomato India and Uber
In a non-cash transaction, Zomato bought the India operations of Uber Eats in January 2020. As a result, Uber gained a 9.19% interest in the restaurant discovery platform from Zomato for about $200 million.
ICICI Prudential Life Insurance Company NSE -2.10% purchased 45 million shares, while Fidelity Emerging Markets Fund purchased 54.4 million. The other buyers’ names were unknown.
Data from the stock exchange shows that the agreements were completed at an average price of $50.44 per deal, which is 34% less than the IPO price of $76 from the previous year. The sale price had been set at an amount between 48 and 54, or 2.8 to 13.6. Zomato’s stock dropped about 10% in one day, to $50.25, then closed flat at $55.40 on August 3.
Shares of Zomato: Falling
After the lock-in period for pre-IPO shares expired on July 25, Zomato shares fell to a record low of Rs 40.55. After the lock-in period, some pre-IPO investors sold their shares. On July 26, Moore Strategic Ventures sold 42.5 million shares for Rs 44 each, a price below the original purchase price. Moore invested Rs 191 crore in Zomato, and the company was sold for Rs 187 crore.
Zomato had a successful IPO on the Indian stock markets in July of last year, and on November 16, its shares more than doubled to an all-time high of Rs 169.10. The stock has dropped 67% since then. On August 3rd, Zomato’s market capitalization was Rs 43,655 crore as opposed to Rs 1.26 lakh crore in November of the previous year.
The stock’s market capitalization last week on 3rd Aug was less than its $5.5 billion previous private valuation. In its earnings report released on August 2nd, Uber stated that its investment in Zomato had resulted in unrealized losses of $245 million in the second quarter and $707 million in the first half of 2022.
About the Losses in the Company
The ride-hailing company reported total losses of $2.6 billion for the second quarter, of which $1.7 billion was attributable to equity investments and combined unrealized losses from the revaluation of its stakes in US-based self-driving tech company Aurora, Indonesian ride-hailing firm Grab, and Zomato.
According to the sources, Akshant Goyal, the chief financial officer of Zomato, stated that the company had a target of reaching adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) breakeven at a group level by the end of the current fiscal year or, at the very latest, by the second quarter of the following fiscal year (FY24).
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