Alipay Plans Zomato Stake Sale: 3.4% via Block Deal, Stock Surge

In the early deals on Wednesday, November 29, shares of food services aggregator Zomato saw a gain of up to 3.69%, reaching ₹118. The boost came after a block deal, where 29.75 crore equity shares, equivalent to a 3.4% stake, changed hands at a discount of 2.2% from the previous close.

Alipay's Stake Sale

Alipay Singapore Holding Pte, an affiliate of Alibaba Group, planned the block deal, selling a 3.4% stake, amounting to 29,75,00,000 equity shares. This move was executed at a discount of 2.2% and is reported to amass approximately US$395 million (₹3,290 crore). The sale follows Softbank's 1.1% stake reduction in Zomato in October.

Investor Landscape

As of the September quarter-end, Alipay Singapore Holding Pte held 29,60,73,993 equity shares, constituting a 3.44% equity stake in Zomato. The Alibaba Group, through its affiliates Antfin Singapore Holding Pte and Alipay Singapore Holding Pte, owns a total of 9.83% stake in Zomato. Antfin Singapore Holdings Pte holds a 6.39% stake. Other VC investors, including SoftBank and Tiger Global, have recently sold portions of their stakes in the open markets.

Zomato's Performance

Zomato, founded in 2004 by Alibaba Group and Jack Ma, is the only new-age startup trading at a price higher than its issue price of ₹76. On a year-to-date basis, the stock has gained an impressive 99%. The company recorded a second consecutive quarter of net profit in July-September, with a net profit of ₹36 crore on the back of a 71% surge in revenue.

Future Projections

Morgan Stanley, after conducting an Alphawise survey, has set a target of ₹140 for Zomato, implying a 19% upside from the current highest price. The survey suggests that the company's Total Addressable Market (TAM) spans across various categories. A 90-day lock-in period for any further share deals will come into effect after the stake sale by Alipay.

Final Words

Buoyed by the company's improving prospects, Zomato's shares have surged over 91% year-to-date. Positive market sentiment highlights the confidence in Zomato's future trajectory. The strategic moves by key investors and the company's strong financial performance position it as a notable player among new-age startups in the market.