Zomato’s board has approved a plan to raise US$1 billion through a qualified institutions placement, representing the company’s first major fundraise since its IPO in 2021.

The decision for a capital raise coincides with Swiggy’s upcoming IPO, targeting US$1.4 billion in funds.

Swiggy, supported by investors including Prosus Ventures and SoftBank, will enter the public market next month.

Zomato’s fundraising is viewed as unexpected, given its existing US$1.2 billion reserves.

It may decrease foreign institutional investor ownership below 50%, as a potential shift could change the company’s status to domestic.

A domestic ownership status would allow Blinkit, Zomato’s quick commerce service, to operate under the inventory model.

Indian law requires foreign-owned firms to function solely as marketplaces. The inventory model offers more control over stock and expansion beyond groceries.

In a shareholder letter, Zomato co-founder and CEO Deepinder Goyal stressed the importance of additional capital to adapt to a competitive market.

Goyal noted that while capital alone does not guarantee success, it is crucial for staying competitive as rivals seek more investment.