Japanese investment giant SoftBank is gearing up for a complete exit from its holdings in foodtech leader Zomato, utilizing open market transactions in the months ahead. This strategic move comes on the heels of SoftBank’s recent profitable maneuver that yielded over INR 100 Cr in gains after partially divesting its Zomato stake earlier this week.
As part of its divestment strategy, SoftBank is also eyeing the offloading of its remaining 2.18% stake in Zomato through block deals in the near future, as per reports by Moneycontrol.
SoftBank’s recent divestiture involved the sale of 10 Crore Zomato shares at an average floor price of INR 94.70 per share, a contrast to the initial acquisition cost ranging between INR 83-85 per share. This maneuver resulted in per-share profits ranging between INR 10-12.
The decision follows the expiration of the lock-in period for Blinkit investors, who were granted Zomato shares as a result of the acquisition of the quick commerce player by the foodtech giant. Following its participation in Blinkit, SoftBank secured a 3.35% stake in Zomato after the acquisition was completed last year.
In light of Zomato not being part of SoftBank’s original investment portfolio, the firm is inclined to divest its remaining stake in the company.
A source stated, “For SoftBank, Zomato is just a monetary transaction, unlike Delhivery, Paytm, or PB Fintech, which it entered as a direct strategic investor. So, it is looking at the deal only from a monetary perspective. It was waiting for Zomato to turn into a profitable bet and now that it has, it will look to exit the company fully as and when it gets opportunities.”
Zomato’s acquisition of the quick-commerce player took place in August of the previous year in a deal valued at INR 4,447 Cr. These shares had a stipulated 12-month lock-in period. In addition to SoftBank, two other venture capital firms, Peak XV and Tiger Global, also secured Zomato shares as a component of Blinkit’s acquisition.
Tiger Global, an investment firm, also recently exited its position in Zomato by selling 12.24 Crore shares, equivalent to a 1.44% stake, in open market transactions on Monday. Tiger Global’s Internet Fund III Pte Ltd conducted the sale in multiple tranches at an average price of INR 91.01 per share, accumulating a total of INR 1,123.84 Cr according to BSE bulk deal data.
Zomato reported a consolidated profit after tax (PAT) of INR 2 Cr in Q1 FY24, a significant turnaround from the net loss of INR 186 Cr reported in the same quarter of the previous fiscal year. Notably, Zomato’s gross order value (GOV) in its food delivery business reached INR 7,318 Cr in Q1 FY24, up from INR 6,425 Cr in the corresponding quarter of the preceding fiscal.