Zomato reveals its much-awaited IPO plan and it’s worth $1.1 billion

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Zomato reveals its much-awaited IPO plan and it’s worth $1.1 billion
Zomato has filed for a $1.1 billion IPOBCCL
  • The food delivery unicorn has filed the draft red herring prospectus for a $1.1 billion initial public offering (IPO) with the bourses.
  • Zomato is offering equity shares worth ₹8,250 crore, out of which ₹7,500 crore will be a fresh issue, while ₹750 crore is an offer for sale from one of its earliest backers Info Edge.
  • Zomato was last valued at $5.4 billion.
Zomato has finally moved the Securities and Exchange Board of India (SEBI) for its much awaited public market debut. The food delivery unicorn has filed the draft red herring prospectus for a $1.1 billion initial public offering (IPO) with the bourses.

Zomato is offering equity shares worth ₹8,250 crore, out of which ₹7,500 crore will be a fresh issue, while ₹750 crore is an offer for sale from one of its earliest backers Info Edge.

Zomato reveals its much-awaited IPO plan and it’s worth $1.1 billion
Zomato DHRP

Founded in 2008 by Deepinder Goyal and Pankaj Chaddah, the startup’s IPO has been one of the most awaited ones in the Indian tech ecosystem. The firm had made several changes in its management and administration ahead of the market offering – from naming Goyal as a managing director for the next five years to converting itself from a private company to a public limited company - Zomato Limited.
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Zomato, last valued at $5.4 billion, had also raised funds over the year as it prepared for the market debut.

Zomato’s recent fundraising spree
Kora Management, Fidelity Management, Tiger Global, Bow Wave Capital Management and Dragoneer Investment Group$250 millionFebruary, 2021
Tiger Global$102.5 millionSeptember, 2020
Temasek$62 millionSeptember, 2020
Pacific Horizon Investment Trust$5 millionApril, 2020
Ant Financial$150 millionJanuary, 2020

The company has also said that it may go for a pre-IPO placement for an aggregate amount not exceeding worth ₹1,500 crore. “The Pre-IPO Placement, if undertaken, will be at a price to be decided by our Company in consultation with the Managers and will be completed prior to filing of the Red Herring Prospectus with the RoC,” the company said.
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The food delivery giant has grown at least 3 times over in the last four years. Revenue at the end of December 2020, for the preceding 9 months, was ₹1,301 crore, compared to ₹460 crore for the fiscal year ending March 2018.

Zomato reveals its much-awaited IPO plan and it’s worth $1.1 billion
BI India

The company also said that it expects the costs to increase over time and “losses will continue given significant investments expected towards growing our business”.

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Zomato’s IPO comes in the middle of a gruelling second wave of the COVID-19 pandemic in India, which has disrupted the restaurant industry but also boosted online food delivery. Zomato, over the last year, had said that the COVID-19 pandemic had pushed it closer to profitability and that is seen in its DRHP filing.

Zomato reveals its much-awaited IPO plan and it’s worth $1.1 billion
BI India/Zomato DHRP

“In terms of the size of the business, COVID-19 has set us back by a year or so – but a year is only a small blip when you are building a company for the next 100 years,” wrote Zomato CEO Deepinder Goyal in a blog last year

Zomato is a major player in India’s massive online food market

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Zomato along with its top rival Swiggy are the major players in the online food industry. As per a CLSA report, the Indian foodtech industry is expected to grow to $11 billion over the next five years – of which the Swiggy currently holds a 47% market share, while Zomato holds 45%.

A new entry Amazon is also expected to make a mark in the market. Zomato, in January 2020 had acquired one of its rivals UberEats.

The growing competition in the food delivery industry was not missed by Zomato in its DHRP filing. “Our current and future competitors may enjoy competitive advantages, such as greater name recognition, longer operating histories, greater category share in certain markets, market-specific knowledge, established relationships with local restaurants or local delivery businesses and larger existing customer bases in certain markets, more successful marketing capabilities, and substantially greater financial, technical, and other resources than we have,” said the company.
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