zomato, with its initial public offering (IPO) Coming out in a few days, all eyes are on it. Several parties have taken interest in the public issue of this food-delivery company. The latest to show interest in this historic IPO is the state-owned Life Insurance Corporation (LIC). According to a Mint report, LIC is considering bidding for Zomato’s stake in the IPO this week. This is considered a ‘rare move’ as LIC usually invests only in the secondary market. The company makes an exception only if that public issue is part of the government’s disinvestment program.
The food-delivery giant will open its IPO with a valuation of Rs 9,375 crore, which is scheduled to open this week on July 14. The bidding will continue till July 16. The IPO may be broken into a fresh issue of Rs 9,000 crore and an offer of sale (OFS) of Rs 375 crore by its shareholder Info Edge. The fixed price band of the public issue is Rs 72 to 76 per equity share.
Zomato’s valuation has risen to over $8 billion since January. The company’s previous valuation was $5.4 billion. According to the report, this change is largely attributed to the increase in demand for food delivery as a result of the pandemic and the ensuing lockdown. The food ordering platform will be the first of its kind from a conglomerate of Internet unicorns to go into its IPO.
The investment committee of LIC is going to meet soon. It is up to them to take a final call on plans to invest in the upcoming Zomato IPO, Mint sources told .
Zomato IPO background
This IPO is one of the biggest and most important, as Zomato will be one of its peers to open its first public offering. Investors will be able to subscribe to a minimum bid of 195 equity shares or in multiples. Retail investors can bid for 13 lots at the upper limit of the price band, which is Rs 76 per equity share. As it stands, the quota for retail investors is fixed at 10 per cent for retail, 75 per cent for QIBs and 15 per cent for NIIs. There will also be allocation for employees in the IPO. There is a quota of 65 lakh equity shares for all eligible employees. The minimum lot size value of 195 shares is Rs 14,820. According to the information of IPO Watch, the maximum bid remains at 2535 shares with Rs 192,660. The company grew 105 per cent in FY20, while it grew only 47 per cent in FY19.
One of the main shareholders of Zomato is Info Edge, which holds 18.55 per cent stake. Uber BV is another such shareholder with 9.13 per cent share. Alipay Singapore Holding Pte Ltd and Tiger Global hold 8.33 per cent and 6 per cent respectively in the company. Other shareholders include Sequoia Capital Temasek Holdings and Zomato co-founder Deepinder Goyal. The shares of these parties are at 5.98 per cent, 3.65 per cent and 5.51 per cent, respectively.
The valuation of the company in the IPO is assumed to be equal to the market value of all quick service restaurants. According to a report in Times of India, this is more than the listed hospitality chains in the country.
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