The much talked about initial public offering (IPO) for food delivery major Zomato is set to open on July 14 and close on July 16. Under Sebi rules, the stock will be listed before the end of the current month, most likely by July 27, market sources said. The shares of the company are being offered at a price band of Rs 72-76 each, BSE disclosures showed.
The app-based food delivery major, in which listed tech company Info Edge holds a substantial stake, aims to raise about £937.5 million. Of the total issue size, shares worth about £37.5 million are in an offer for sale by the tech entity. On July 2, Zomato received markets regulator Sebi’s nod to launch its IPO. After the listing, the company is eyeing a valuation in the range of $8-10 billion, or about £6 to 7.5 billion, market sources said.
Funds raised by issuing new shares would be used for financing Zomato’s organic and inorganic growth initiatives, and general corporate purposes, the draft papers for IPO had noted. In the last few days, on the back of strong demand for its shares from large institutional investors, the company has upped the IPO size from about £750 million that was planned earlier. At the same time, InfoEdge has also halved the size of its offer for sale from £75 million earlier.
During fiscal 2020, Zomato’s revenues had jumped over twofold to $394 million compared to its year-ago period, while its ebitda (earnings before interest, taxes, depreciation, and amortisation) loss was around £220 million.
Zomato’s IPO valuation creates buzz
The valuation of Zomato has been a topic of much discussion on social media with questions being raised if it’s really worth that much. People shared mixed views. For some, a tech-enabled company should be valued differently than a traditional one despite its losses. For others, the IPO is an opportunity for venture capital and private equity investors to offload their liability to retail investors. Then there are those that believe Indian food tech companies will reflect valuations earned by global peers like DoorDash to a significant extent.
Interestingly, the Zomato IPO’s valuation at about £6 billion is equivalent to the combined market value of all the quick service restaurants (QSRs) listed on Indian bourses. Its value is also more than the market value of all the listed hospitality chains operating in the country, taken together. This second list includes the behemoth like Indian Hotels that runs the iconic Taj chain of hotels in India and abroad, and also Oberoi Hotels.