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Tiger Global cuts stake in Zomato by almost half; sells 18 crore shares in a week – Moneycontrol

Hedge fund company Tiger Global on August 4 said that it has effectively sold 18 crore shares of online food delivery aggregator Zomato in the week after the one-year lock-in period for pre-IPO investors ended on July 23.

Tiger Global investment vehicle Internet Fund IV held a 5.11 percent stake in Zomato before the lock-in ended. Its shareholding has now reduced to 2.77 percent.

Tiger Global had first invested in Zomato in September 2020. The food aggregator and delivery platform had raised $102.5 million in a funding round led by the New York-based hedge fund company. The fundraise had valued Zomato at $3.4 billion then.

Zomato then raised a $250 million funding round led by Tiger Global in February 2021, ahead of its initial public offering (IPO), at a valuation $5.4 billion. As of August 3, Zomato had a market capitalisation of about $5.74 billion.

Tiger Global’s partial stake sale in Zomato comes at a time when the hedge fund company has seen the value of its portfolio shrink sharply since the start of 2022, amid a correction in global tech valuations. Tiger Global’s flagship fund, which aggressively invests in technology companies, ended the first half of the year down 50 percent after fees, according to a report by the Financial Times.

Meanwhile, cab aggregator Uber on August 3 offloaded its entire 7.78 percent stake in Zomato, marking its exit from the Indian food delivery giant.

The company sold a total of 61,21,99,100 shares for Rs 50.44 a piece via a block deal, as per the data available on the BSE.

The same amount of shares were held by Uber in Zomato as of June 30, 2022, according to the shareholding pattern shared with stock exchanges.

The bulk of the offloaded shares were picked up by Fidelity Investment Trust Fidelity Series Emerging Markets Opportunities Fund, which bought 5.44 crore out of them for Rs 50.26 a piece, the stock exchange data showed.

Amid large sell-off pressure on the Zomato stock last week, venture capital firm Moore Strategic Ventures exited its entire holding of 4.25 crore shares in the company at Rs 44 apiece, according to block deal data. 

The cumulative size of the trade executed by Moore was around Rs 187 crore whereas it had bought the holdings for Rs 191 crore before the foodtech company’s initial public offering.

As such, Moore has booked a loss of around Rs 4 crore on the investment.

With the lock-in period of one year for around 613 crore shares or 78 percent of Zomato’s stock ending on July 23, analysts had cautioned that the company’s share price may face sell-off pressure this week.

“As there is no promoter, all shareholders, including the founders, collectively owning 77.87 percent who were locked in would be free to sell the shares without any disclosures on July 23. This would be a big overhang on the stock price,” Shriram Subramanian, founder and MD of proxy advisory firm InGovern, earlier told Moneycontrol.

At 11:51am, shares of Zomato traded at Rs 54.90 apiece on the BSE, while the benchmark Sensex was at 57,733.62, down 616.91 points or 1.06 percent.