Following its peers, Sequoia Capital India has trimmed its pre-IPO (initial public offering) stake in food-tech major Zomato Ltd. to 4.4% from 6.41% earlier. In a regulatory intimation by Zomato filed on the BSE, Sequoia sold 6.6 crore shares between September 6, 2021, and October 14, 2021, and 10.5 crore shares between June 27, 2022, and August 25, 2022, in the open market. The offloading was done by two of Sequoia’s investment vehicles -- Sequoia Capital India Growth Investment Holdings I and SCI Growth Investments II.
After the stake sale, Zomato shares fell 0.24% today to ₹61.90 on the BSE. The stock underperformed the sector by 0.39%. The food-tech stock has been losing for the last three days and has fallen 3.96% in the period. The stock is trading higher than 20-day and 50-day moving averages but lower than 5-day, 100-day and 200-day moving averages.
The stake sale by Sequoia India comes after two of the biggest investors in Zomato, Uber and Tiger Global, trimmed and exited their stakes, respectively, after the one-year lock-up on their pre-IPO shares ended.
Uber Technologies offloaded its entire 7.78% stake in homegrown food delivery company for ₹3,088 crore ($390 million) this month. As per the exchange data, a total of 612 million shares were sold at ₹50.44 apiece, a discount of 9.3%.
The stake was sold to over a dozen institutional investors, including Fidelity Investments, ICICI Prudential Life Insurance, and others. Fidelity Investments purchased shares worth ₹274 crore, while ICICI Prudential Life Insurance acquired shares amounting to ₹226 crore, the data showed.
Uber had acquired a stake in the food technology firm after it sold the Indian operations of Uber Eats, its food delivery business, for around $350 million in January 2020.
Tiger Global, through its investment vehicle Internet Fund IV, owned a 5.11% stake in Zomato before the lock-in period and reduced its shareholding to 2.77%. After the end of the lock-in period, Tiger Global pared around 18 crore shares of the restaurant aggregator. The lock-in period, which ended on July 23, 2022, allowed anchor investors to sell their shares in the open market.
Zomato had allotted 55.22 crore equity shares to anchor investors at a price of ₹76 apiece, which was almost 45% of the total issue size. The company raised ₹9,375-crore from the IPO. The stock made its debut on July 23, 2021, by listing at a 51% premium over the issue price of ₹76 per share on the BSE. However, the food-tech stock has been consistently under stress since listing amid concerns about valuations and future growth prospects. It hit an all-time low of ₹40.55 on July 27, 2022, a huge fall from its lifetime high of ₹169.10 on November 16, 2021.