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The IPO valuation objective for India’s Zomato has been raised to $10 billion, owing to a boom in online food ordering, according to the Zomato Summit in India. Photo courtesy of Zomato
Anirudh Laskar contributed to this article.
6th of July, 2021
According to two people familiar with the situation, Zomato, India’s most valuable food delivery startup, is seeking an IPO valuation of $10 billion amid a boom in online food ordering, restaurant bookings, and subscriptions for Zomato Pro businesses.
The company’s latest valuation is much more than the $8 billion it sought three months ago. Zomato is poised to go public later this month, making it the first of India’s top unicorns to do so.
“The IPO pricing for Zomato will be done in line with the surge in investor interest, which values the firm more than three months ago,” one of the two persons listed above, who asked to remain anonymous, said.
Zomato will be the first of India’s megastartups to get access to the public markets. Paytm, a payment services company; Flipkart, an e-commerce firm now acquired by Walmart Inc.; Policybazaar, an online insurance platform; and Nykaa, a cosmetics and apparel website, are all planning to go public.
The IPO rush comes as hordes of people turn to the internet to order everything from groceries to biryani to medicines as a result of the pandemic. Many specialists believe that the behaviors developed during the previous year are unlikely to change much.
Zomato’s IPO will witness a 10-15% dilution, mostly due to a fresh issue of shares and an offer for sale (OFS) by its early backer Info Edge (India) Ltd.
“The overall value of shares to be issued in the IPO plus OFS might be approximately $1.5 billion,” the first person said, adding that this is up from the original intention of $1.1 billion.
Info Edge (18.55 percent), Uber BV (9.13 percent), Alipay Singapore Holding Pte Ltd (8.33 percent), Antfin Singapore Holding Pte Ltd (8.20 percent), Tiger Global (6 percent), Sequoia Capital (5.98 percent), co-founder Deepinder Goyal (5.51 percent), Temasek Holdings subsidiary (3.65 percent), and a few other investors are among Zomato’s existing investors.
Apart from the fact that Zomato’s business has grown significantly in the last six months, potential investors are also excited by the high demand for shares of B2C startups and the fact that Zomato will be India’s first food-tech unicorn to be listed on a stock exchange, according to the sources cited above.
“Several significant asset management firms and certain existing investors, including as Temasek, may come in as anchor investors in Zomato’s IPO,” the first person added.
T Rowe Price, Fidelity Investments, and Capital Group have also indicated interest in investing in Zomato’s much-anticipated IPO, according to the two persons, who asked to remain anonymous.
The second person, who is directly involved in the company’s IPO discussions, stated, “Most existing investors are keen to remain with their holdings because the company’s growth rate is high.”
Zomato, Fidelity, and Capital Group representatives declined to comment.
Info Edge lowered their OFS size in Zomato’s IPO by half to 375 crore from 750 crore as planned earlier, according to an exchange filing on Sunday.
According to the two persons, Zomato intends to utilize the revenues from the IPO to fund acquisitions and organic growth ambitions. In the first three quarters of FY21, it made 1,367 crore in revenue. However, expenses totaled over 1,724 crore, resulting in a deficit of 684 crore. Revenue climbed by 96% to 2,743 crore in the fiscal year ending March 2020, up from 1,398 crore the previous year.
Zomato expects to serve at least 403 million online orders in fiscal 2020, with a gross order value of Rs 11,221 crore. In FY20, Zomato provided delivery services in over 500 locations with over 200,000 delivery partners.
As of December 31, Zomato’s paid premium subscription service “Zomato Pro” had 1.4 million subscribers and over 25,350 Pro Restaurant Partners in India.
The original version of this article appeared on livemint.com.
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