Masayoshi Son-led SoftBank’s fund-SVF Growth (Singapore) Pte. Ltd will sell at least 1.1% stake in food-delivery and restaurant-discovery firm Zomato Ltd for around ₹1,020 crore on 20 October, as the Japanese fund plans a full exit from the food delivery business.
SoftBank’s stake sale decision in Zomato follows the latter’s dramatic rise in market price over the past year.
According to exchanges, over the past one year, Deepinder Goyal-founded Zomato’s price has gone up by 80% to ₹111.65 from ₹62.05.
The food delivery business has picked up momentum with the ongoing cricket World Cup and the ongoing festive season.
The Cricket World Cup 2023 may offer a boost to food aggregators’ delivery volumes, which may drive better growth rates over the medium term, according to market experts.
“We reiterate BUY on Zomato, with a raised target price of ₹140 (from ₹130 earlier),” said Elara Capital in a note to investors on Thursday.
The online food delivery space has witnessed an increase in take rates from 5.5% in 2015 to about 24-25% in the context of cloud kitchens, which Elara said, “are not necessarily linked to the average order value or AOV.”
The Japanese investment behemoth, according to a term sheet, a copy of which has been reviewed by Mint, through SVF Growth will sell Zomato’s shares for an offer price of ₹109.4-111.65 per share. SoftBank will offer a maximum 2% discount to the current market price for selling its stake in Zomato, according to the term sheet.
After the stake sale SoftBank will be left with a 1.15% stake in Zomato. It is likely to sell this stake over the next several weeks, a person briefed on the deal said.
As on 30 June, SVF Growth held a 3.42% stake in Zomato. This stake was subject to a 12-month lock-in following Blinkit’s acquisition, that concluded on 25 August. The transfer of the stake from SoftBank to Zomato happened in connection with Zomato’s acquisition of the quick commerce company in 2022. Softbank had earlier invested around $303 million in Grofers between 2015 and 2020. Grofers later became Blinkit.
On 30 August 2023, SoftBank’s SVF Growth (Singapore) Pte. Ltd had sold a 1.17% stake in Zomato Ltd for ₹940 crore ($114 million). This followed a similar stake sale by other investors in Zomato.
On 28 August, Tiger Global-backed Internet Fund III Pte Ltd had sold 123.5 million shares, or 1.44% in Zomato at an average price of ₹91.01 apiece via bulk deal on the BSE.
Between 25 July last year and 2 August, the New York-based hedge fund sold over 184 million shares, or 2.34%, of Zomato in the open market. On 29 August, DST Global, via its investment firm Apoletto Asia , too had monetized around 32 million Zomato shares at ₹90.10 apiece.
During stake sales by offshore investors, companies including Axis Mutual Fund, SBI Life Insurance Co., ICICI Prudential Life Insurance, Founders Collective Fund, Morgan Stanley Asia Singapore, and Societe Generale picked up the shares of the food delivery company.
When contacted Softbank declined to comment.