Zomato, one of India's leading food-tech companies, is gearing up for a significant financial move. The company plans to raise ₹8,500 crore in its upcoming fund-raising round. This strategic decision is expected to play a crucial role in reshaping the ownership structure of Zomato, particularly by increasing the domestic holding above 50% and placing a cap on Foreign Institutional Investor (FII) holdings at 49%. This move is part of Zomato’s long-term strategy to streamline its investment portfolio, strengthen its domestic investor base, and ensure compliance with Reserve Bank of India (RBI) guidelines.

The company's board is set to meet on October 22 to discuss the finer details of this fund-raising process. The outcome of this meeting is expected to have a considerable impact on Zomato’s financial structure and market positioning, particularly in relation to its investor base, both domestic and foreign.

Details of the Fund Raising

The ₹8,500 crore fund-raising is part of a broader strategy to adjust the balance between foreign and domestic ownership. At present, FII holding in Zomato stands at 45.23%, while Foreign Direct Investment (FDI) accounts for 5.25%, making the total foreign ownership 50.48%. This has raised concerns about the dominance of foreign investors, which Zomato seeks to address by increasing domestic participation through this capital infusion.

The main objective of the fund-raising is to reduce Zomato’s dependence on foreign capital and ensure that domestic investors have a stronger say in the company’s governance and direction. By capping FII holding at 49%, Zomato will be able to maintain compliance with regulatory norms while also attracting more domestic capital into its operations.

Post Fund-Raising Plan and RBI Approval

Once the fund-raising is complete, Zomato plans to apply to the Reserve Bank of India (RBI) to formally cap FII holdings at 49%. This step is essential for Zomato to comply with regulatory requirements and create a more balanced ownership structure. Limiting FII holding below the 50% threshold will prevent foreign investors from gaining majority control of the company, thereby ensuring greater domestic shareholder influence.

Zomato’s application to the RBI will be a significant part of its post-fund-raising strategy. By keeping foreign ownership under 50%, Zomato is positioning itself as a company that prioritizes domestic interests and works in alignment with India's broader economic and regulatory frameworks.

Current Shareholding Structure

As it stands, Foreign Institutional Investors (FII) and Foreign Direct Investment (FDI) together account for 50.48% of Zomato’s total shareholding. The split shows that FIIs hold a substantial portion, while FDIs hold a smaller yet notable stake. This high level of foreign involvement in Zomato has driven the company’s need to reassess its shareholding distribution.

On the domestic side, the current fund-raising is expected to significantly boost the stake of Indian shareholders, taking the domestic holding above 50%. This shift will not only reduce foreign control but also enhance domestic shareholder confidence in the company’s future growth.

Zomato's Board Meeting and Timeline

Zomato’s Board of Directors will meet on October 22 to discuss the finalization of this ₹8,500 crore fund-raising plan. This meeting is crucial, as it will set the tone for how the company proceeds with its financing strategy. In addition to addressing the fund-raising details, the board will also deliberate on the process of applying to the RBI for capping FII holdings.

The October 22 meeting is expected to provide greater clarity on how Zomato intends to deploy the raised capital, its long-term investment strategies, and its path toward sustained growth in both the domestic and international markets. Given the rapidly evolving dynamics of India’s tech and food-delivery sector, this meeting will likely shape Zomato’s strategic priorities for the coming years.

Market Impact and Investor Sentiment

This fund-raising announcement is likely to generate significant interest from both domestic and international investors. By capping FII holding, Zomato is sending a clear message that it aims to maintain a strong domestic investor base, a move that is likely to boost local investor confidence. For FIIs, the cap of 49% represents a limit on their influence, but it also signals Zomato’s commitment to maintaining a healthy balance between foreign and domestic ownership.

On the other hand, Zomato’s decision to raise ₹8,500 crore will provide the company with substantial capital to expand its operations, improve its technological infrastructure, and strengthen its market presence in the highly competitive food delivery sector. The infusion of capital will likely be used to enhance service offerings, logistics, and overall customer experience, allowing Zomato to maintain its competitive edge against rivals like Swiggy and Dunzo.

Investors will be keenly watching the outcome of the October 22 board meeting, as it will provide insight into Zomato’s future trajectory. In particular, they will be interested in how the raised funds will be allocated and how the company plans to balance its domestic and international aspirations.

Conclusion

Zomato’s ambitious ₹8,500 crore fund-raising plan is a pivotal moment in the company’s financial evolution. By boosting domestic holdings and capping FII ownership at 49%, Zomato is signaling its commitment to a balanced ownership structure that aligns with Indian regulatory standards. This move is expected to reinforce domestic shareholder confidence, attract new investments, and ensure Zomato’s continued growth in the dynamic food-tech space.

As the company prepares for its October 22 board meeting, all eyes are on how Zomato will navigate this significant financial maneuver. With the right strategy, Zomato could emerge stronger, more resilient, and better equipped to tackle the challenges of an ever-changing marketplace.

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