Saturday, April 27

Food delivery platform Zomato’s IPO Oversubscribed

Bengaluru, Jul 14th, 2021: India’s leading food delivery platform Zomato’s initial public offering was oversubscribed on an opening day with retail investors bidding for 2.7 times the number of shares reserved for them.

The offer received bids for 75.60 crore equity shares against an IPO size of 71.92 crores, stock exchange data showed.

Retail investors sought 2.69 times the portion reserved for them. Against 12.95 crore shares reserved for retail individual investors, 34.88 crore shares were bid.

Non-institutional investors put in bids for 13 percent against their reserved portion while 38.88 crore shares reserved for qualified institutional buyers (QIBs) were almost fully subscribed. Of the 38.09 crore shares sought by QIBs, over 36.84 crore was by foreign institutional investors (FIIs).

The portion set aside for employees has been subscribed 18 percent. The IPO, the biggest in India this year, is open for subscription till Friday in a price band of 72-76 INR per share.

Zomato has already mobilized Rs 4,196.51 crore from 186 anchor investors on July 13, a day before the issue opened. The IPO size has been reduced to Rs 5,178.49 crore from Rs 9,375 crore earlier.

The company, backed by Jack Ma’s Ant Group Co, is the first from a long list of Indian unicorn startups to launch an IPO. It is also the first among Indian online food aggregators.

The IPO, which will give Zomato a valuation of Rs 64,365 crore, is being touted as the second-biggest since SBI Cards and Payment Services Rs 10,341 crore issue in March 2020. It will surpass Indian Railway Finance Corp offering in January.

As the IPO opened, the anxiety was reflected in tweets by Deepinder Goyal, the founder of the food delivery app “Just ordered a triple breakfast @zomato. Stress eating,” he tweeted.

Another stock lineup after Zomato, Paytm founder Vijay Shekhar Sharma said, “Make it large Deepi! Best wishes for a superb listing. Rooting for you man.”

Paytm too is hitting the market with a public offer in a couple of weeks.

Post-IPO, the valuation of Zomato will be more than the combined market capitalization of five listed fast food and restaurant companies Jubilant FoodWorks (the master franchisee for Domino’s Pizza in India), Burger King India, fast food restaurant holding company Westlife Development Ltd, Barbeque-Nation Hospitality and Speciality Restaurants.

The Zomato IPO comprises a fresh issue of equity shares worth Rs 9,000 crore and an offer-for-sale (OFS) worth Rs 375 crore by existing investor Info Edge (India), which is the parent company of Naukri.com, according to the information provided in the draft red herring prospectus.

The restaurant aggregator has said it will utilise the net proceeds from the fresh issue for funding organic and inorganic growth initiatives (Rs 6,750 crore) and general corporate purposes.

Incorporated in 2008, Zomato is present in 525 cities in India, with 3,89,932 active restaurant listings along with a presence in 23 countries outside India.