Antfin Singapore to Sell $408 million stake in Zomato after strong earnings

Singapore-based Antfin will offload a 1.54 per cent stake in the online food delivery platform Zomato. The deal is valued at around $408 million. This comes just after Zomato posted stellar quarterly earnings, with net profit surging 126.5 times to Rs 253 crore in the three months ended June 2024. The sale will likely be made through block deals at a floor price of Rs 251.68 per share, a 4 per cent discount to Zomato's last closing on the NSE.

Stake sale details

As of June 30, 2024, Antfin held a 4.3 per cent stake in Zomato, translating into around 13.6 crore shares. If the transaction goes through at this price, Antfin's shareholding in Zomato will come down to 2.76 per cent. These shares will be offloaded at a floor price, which is a tad below the recent close of the stock closed at Rs 263.24 on the NSE and Rs 262.30 on the BSE, down 0.83 per cent in the last trading session. The engagement of Goldman Sachs and Morgan Stanley as placement agents for this transaction further testifies to its size and the deal's significance for the market.

Zomato's market performance

Zomato's stock has been on this remarkable northward journey, giving multi-bagger returns of 110.68 per cent in 2024 alone. In two years, the shares surged 327.20 per cent. This growth could be credited to many strategic initiatives taken by Zomato, including a recent hike in platform fees and improvements in operational profitability in its quick commerce arm, Blinkit.

Blinkit was acquired by Zomato in June 2022. Zomato's board approved the Rs 4,447 crore transaction to acquire Blinkit, as detailed in an exchange filing. The ancillary business was bought for Rs 61 crore.

Further, the strong financial results have brought the company into the limelight of investor and analyst attention. In a recent report, the global brokerage firm UBS has just raised its target price for Zomato shares from Rs 260 to Rs 320. This seems to be on account of strong first-quarter results and positive guidance.

Implications of the sale

This move by Antfin to offload a part of its stake in Zomato could not have been more opportune. It just came right after the massive fundraising exercise by the energy transmission unit of Zomato, which raised $1 billion. It could be a strategy where it wants to cash out its investments at times the market conditions are favorable but still have a stake in a fast-growing company. The deal will most likely be watched by market participants to see its impact on the price of Zomato's stock and investor sentiment for the food delivery sector in times ahead.