Sequoia Capital India reduces stake in Zomato, sells stock in two tranches

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Sequoia Capital India has joined the ever-increasing list of private investors selling their stakes in Indian food delivery giant Zomato, whose stocks have taken a turn for the worse over the months. A filing with the BSE showed that the venture capital firm sold a total of 2% of its stake in the food delivery aggregator.

The filing with the BSE shows that Sequoia Capital India sold a total of 17.2 crore pre-IPO shares of Zomato in two phases since last year.

Between September 6-October 14, 2021, it sold 6.7 crore shares, and more recently (between June 27-August 25, 2022), it sold 10.5 crore shares in the unicorn. While Sequoia Capital India Growth Investment Holdings I sold the first round of shares, Sequoia Capital India Growth Investment Holdings II sold the second round.

With the sale of the shares in the two tranches, Sequoia’s stake in the Gurugram-based Zomato fell from 6.41% to 4.4%. However, it has received 4.5crore incremental equity shares of Zomato this August due to the food delivery unicorn’s acquisition of Blinkit by Zomato in a stock swap deal, and these shares have a further lock-in period of one year.

This aggressive sale of Zomato shares by different investors comes soon after the end of the one-year lock-in period for 78% of Zomato’s shares (which amounts to around 613 crore shares) ended on July 23. The unicorn’s stocks have taken a heavy beating this year, and closed at ₹68.85 per share on Friday, representing a steep fall of over 50% from its peak price of ₹169.10 in November 2021.

With this, Sequoia joins investment firm Tiger Global, cab aggregator Uber, and investment company Moore Strategic Ventures to offload its shares in the Indian unicorn.

Moore was one of the earliest private investors (the first, to be more precise) to offload its stake in the food delivery and restaurant aggregator, selling its entire stake of 4.25 crore shares soon after the lock-in period ended. It exited Zomato at a loss.

Tiger and Uber sold their stakes at the beginning of this month – while the investment major sold 2.34% of its Zomato stake, Uber offloaded its entire stake of 7.8% by selling 612 million shares through multiple block deals and exiting Zomato entirely.

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