Food delivery giant, Zomato, is set to hit the market and go ahead with its public issue on July 14 according to its draft red herring prospectus that it filed. The issue is set to close on July 16. The company is planning to raise Rs 9,375 crore through its initial public offering (IPO) which consists of a fresh issue of Rs 9,000 crore and an offer for sale (OFS) of Rs 375 crore from its shareholder, Info Edge India Ltd. The company is also allocating the employee reservations at 6.5 million shares. The price band is set at Rs 72 to Rs 76 per share. The face value is Rs 1.00 per equity share, with a retail portion of 10 per cent, as per information on IPOWatch.
Zomato got its application for the fundraising via the IPO cleared by SEBI earlier in the week. In February, Zomato raised $250 million in its pre-IPO funding round, which brought up the valuation of the company to approximately $5.4 billion. The investors at the time who took part in the funding round were Tiger Global, Fidelity, Dragoneer, Bow Wave and Kora Management. The food giant filed its draft red herring prospectus in April of 2021 with SEBI for its IPO, which consisted of its Rs 8,250 crore IPO with a fresh issue of Rs 7,500 crore. There was also an OFS of Rs 750 crore by investor Info Edge.
Zomato started to see some significant changes with the onset of the lockdown and pandemic when food delivery demand was at an all-time high. In FY20 the company grew by 105 per cent as compared to FY19 while the cost only grew by 47 per cent. In June of 2020, the company had revenue of $17 million with earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $1.5 million. When Zomato acquired a rival food delivery company, Uber Eats, the former was propelled into the spotlight and took centre stage in the market. Even with the transition in this period the company was able to maintain a 97 per cent retention of its Gross Merchandise Value (Value) as per a company report filed in June of 2020.
The company has thus far has raised around $2.1 billion in funding over 21 different rounds, with the latest one being the pre-IPO round that was held in February. Zomato is funded by a total of 25 investors with Fidelity Management and Research Company, as well as Tiger Global Management, being the most recent additions to that roster, according to CrunchBase.
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 goes forward with its IPO, it is also eyeing a staggering $8.7 billion listing valuation as a result of huge demand from the global tech specialist funds and EM funds, as per a report by Moneycontrol. The food delivery giant also recently gave the green light to the investment plan that it had in place for the grocery start-up Grofers. The report suggests that since the signing of the deal, the company along with the existing investor, Tiger Global, will invest a lump sum of $120 million into the start-up. This will catapult Grofers into the unicorn club, as it breaches the $1 billion ceiling.
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