Zomato Witnesses INR 1,127 Crore Block Deal, with SoftBank Likely as the Seller

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Three points you will get to know in this article:

  • Zomato’s shares surged after a significant block deal, with SoftBank’s SVF Growth planning to offload another stake.
  • Multiple international investors, including Alipay and Tiger Global, exited Zomato through substantial block deals, while the company reported strong financial performance.
  • Zomato and Swiggy received notices for a significant goods and services tax (GST) related to delivery fees.

Zomato, the prominent player in the food tech industry, experienced an upward momentum in its stock value during the initial trading hours this Friday, December 8th. This positive movement was fuelled by a significant block deal.

In this noteworthy transaction, approximately 1.06% ownership of the company, equivalent to 9.35 crore shares, changed hands. The shares were traded at an average price of INR 120.5 each, resulting in a total transaction value of INR 1,127 crore. It’s worth noting that the identities of the buyers and sellers involved in these transactions remain undisclosed.

As the day unfolded, Zomato shares were actively traded at INR 123.6 per share on the BSE during the early session, showcasing a 1.3% increase from its previous closing price. This positive market activity indicates a promising start for Zomato’s stock on this particular trading day.

SoftBank’s SVF Growth Plans Another Stake Offload

On Thursday, December 7, drawing on various media sources, that SoftBank’s SVF Growth from Japan is contemplating the sale of an additional 1.1% stake in Zomato through a block deal valued at $135 million.

According to the information provided, SVF Growth is anticipated to offer these shares at INR 120.5 each, representing a slight markdown compared to Zomato’s closing price of INR 121.8 on the BSE on Thursday.

As of the end of the September 2023 quarter, SVF Growth (Singapore) Pte Ltd held a 2.17% stake in Zomato, equivalent to 18.71 crore shares. Subsequently, in October, the Japanese investor divested a 1.1% stake, involving 9.36 crore shares, in the prominent FoodTec company.

In August of this year, SVF Growth made a strategic move by selling off 10 crore shares, representing a 1.15% stake in Zomato. This decision resulted in a reduction of their overall ownership in the company to 2.17%.

Just last week, the international investor Alipay bid farewell to its Zomato journey, parting ways with its entire 3.44% stake through a series of block deals totalling an impressive INR 3,336.7 crore. Interestingly, the vacuum left by Alipay was quickly filled as savvy investors, including Morgan Stanley and Fidelity Investment, eagerly stepped in to acquire these shares.

Adding to the unfolding saga, investment heavyweight Tiger Global exited Zomato in August, making waves by selling 12.24 crore shares valued at INR 1,123 crore. This transaction translated to relinquishing a 1.44% stake in the popular food giant. The dynamic landscape of Zomato’s stakeholder makeup continues to evolve, reflecting the intricate dance of investors in the market.

In its latest financial report for the second quarter of the fiscal year 2023-24 (FY24), Zomato proudly announced its second consecutive profitable quarter. The company’s profit after tax witnessed an impressive surge, soaring to INR 36 Cr. This remarkable figure marks an 18X increase from the previous quarter’s PAT of INR 2 Cr.

On a slightly different note, Zomato and Swiggy, the dynamic duo in the food delivery realm, found themselves in the spotlight as they reportedly received notices for a combined goods and services tax (GST) totaling around INR 1,000 Cr. This substantial amount represents the 18% tax applied to the entirety of the delivery fees collected by the two platforms since the inception of their food delivery services. Quite a significant development, indeed.

In summary, Zomato’s shares rose after a significant block deal, with SoftBank’s SVF Growth planning to offload a 1.1% stake. The Japanese investor had previously reduced its holding through multiple stake sales. Alipay and Tiger Global also exited Zomato through substantial block deals. Meanwhile, Zomato reported a strong financial performance, with a substantial surge in profit after tax. However, both Zomato and Swiggy face potential challenges with notices for a combined goods and services tax amounting to around INR 1,000 Cr related to delivery fees.

SA Team

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