food delivery giant, zomato, is set to hit the market and proceed with a public offering on July 14 as per a draft of its red herring prospectus. The issue is scheduled to close on July 16. The company is planning to raise Rs 9,375 crore through its initial public offering. (IPO) This includes a fresh issue of Rs 9,000 crore and an offer for sale (OFS) of Rs 375 crore from its shareholder Info Edge India Limited. The company is also allocating employee reservations on 6.5 million shares. The price band is set at Rs 72 to Rs 76 per share. As per information from IPOWatch, the face value is Rs 1.00 per equity share, with a retail share of 10 per cent.
Zomato received its application for fundraising through a SEBI-approved IPO earlier this week. In February, Zomato raised $250 million in its pre-IPO funding round, raising the company’s valuation to approximately $5.4 billion. Tiger Global, Fidelity, Dragoneer, Bow Wave and Quora Management were among the investors participating in the funding round. The food giant filed its draft red herring prospectus with SEBI in April 2021 for its IPO, which included an IPO of Rs 8,250 crore with a fresh issue of Rs 7,500 crore. There was also an OFS of Rs 750 crore from Investor Info Edge.
Zomato started seeing some significant changes with the lockdown and the onset of the pandemic, when the demand for food delivery was at an all-time high. The company grew 105 per cent in FY20 as compared to FY19, while costs grew only 47 per cent. In June 2020, the company had revenue of $1.7 million with earnings before interest, tax, depreciation, and amortization (EBITDA) of $1.5 million. When Zomato acquired a rival food delivery company, Uber Eats, the former was thrust into the limelight and took center stage in the market. Even with the change in this period, the company was able to maintain 97 percent of its Gross Merchant Value (Value) retention as per the company’s report filed in June 2020.
The company has so far raised about $2.1 billion in funding in 21 different rounds, with the latest being a pre-IPO round held in February. According to Crunchbase, Zomato is funded by a total of 25 investors along with Fidelity Management and Research Company, with Tiger Global Management being the most recent addition to that roster.
The book-running leads for the upcoming issue will be Kotak Mahindra Capital Company, Morgan Stanley India Company and Credit Suisse Securities (India). BofA Securities India and Citigroup Global Markets India are the Book Running Lead Managers for the OFS.
As the company proceeds with its IPO, it is also eyeing a listing valuation of $8.7 billion, as a result of huge demand from global tech specialist funds and EM funds, according to a report by Moneycontrol. The food delivery giant recently cleared the investment plan for grocery start-up Grofers. The report reveals that since the signing of the deal, the company will make a one-time investment of $120 million in the start-up along with existing investor Tiger Global. It will move Grofers into the unicorn club, as it crosses the $1 billion threshold.
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