Softbank to cut stake in Zomato, plans full exit

livemint.com:

₹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.