Zomato's mega initial public offering (IPO) ended with a bumper 38 times oversubscription on Friday as institutional investors poured money to get a pie of the hottest online food delivery platform. Zomato got bids for 2.75 billion shares against 719.2 million shares on offer, stock exchange data showed. The IPO is India's biggest since March 2020.
Institutional investors, who shied away in the first two days of the IPO, bid several times over the number of shares reserved for them. While qualified institutional buyers or QIBs bid almost 52 times the quota reserved for them, non-institutional investors sought 6.4 billion shares against their quota of 194.3 million shares.
Retail investors bid 7.45 times against the 129.6 million shares reserved for them. The only category that wasn't fully subscribed by the shares reserved for company employees, who sought just 62 per cent of the 6500,000 shares reserved for them.
The IPO opened for subscription on July 14 in a price band of Rs 72-76 per share. It closed on Friday. Zomato has already mobilised £419.65 million from 186 anchor investors on July 13, a day before the issue opened. The IPO size has been reduced to £517.85 million from £937.5 million 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 £6.44 billion, is being touted as the second-biggest since SBI Cards and Payment Services' £1.03 billion issue in March 2020. It will surpass Indian Railway Finance Corp offering in January.
Post-IPO, the valuation of Zomato will be more than the combined market capitalisation 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.
At Friday's closing price, the combined market capitalisation of the five companies was £5.98 billion. The Zomato IPO comprises a fresh issue of equity shares worth £900 million and an offer-for-sale (OFS) worth £37.5 million 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.
Zomato has said it will utilise the net proceeds from the fresh issue for funding organic and inorganic growth initiatives (£675 million) 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.