The Securities and Exchange Board of India (SEBI) has approved the initial public offering (IPO) application of food delivery company Zomato, paving the way for one of the most keenly awaited share sales in recent history.
Zomato, backed by China’s Ant Group, filed for the IPO in April and is said to be looking to raise up to $1.2 billion. SEBI is likely to give the official approval this Monday for the IPO, a person familiar with the matter told Moneycontrol.
According to the DRHP filed by Zomato, the company will offer equity shares aggregating up to Rs 8,250 crore (nearly $1.1 billion). Of this, Rs 7,500 crore will be fresh issue, while Rs 750 crore will be an offer for sale for its existing investor Info Edge.
Moneycontrol first reported on August 9, 2020, that Zomato was looking to raise money from the likes of Temasek and Tiger Global ahead of a targeted IPO in 2021.
Zomato raised $250 million in its pre-IPO primary fundraise a couple of months ago at a valuation of $5.4 billion from investors such as Kora Management, Tiger Global, Fidelity, Dragoneer, and Bow Wave. Post this, Info Edge, one of Zomato's earliest investors, said its effective stake in Zomato is now 18.4 percent.
This was on top of the $660 million primary round that it closed in December 2020, at a valuation of $3.9 billion from ten new investors including Tiger Global, Kora, Luxor, Fidelity (FMR), D1 Capital, Baillie Gifford, Mirae, and Steadview.
After the initial COVID shock in March last year, Zomato had said in September 2020 that the online food delivery space has recovered and even exceeded pre-COVID levels in a number of large pockets in India, as more people embrace online ordering. Zomato co-founder and CEO Deepinder Goyal had said then that the tailwinds for food delivery businesses are clearly visible, and that he believes the growth of the sector will accelerate post-vaccine. He also said the burn rate is very low and that its market share is accelerating in all regions.
Zomato reported a revenue of Rs 2,486 crore for FY20, even as its losses widened to Rs 2,451 crore during this period, as the pandemic shrunk order volumes and dine out revenue.
The food delivery and restaurant aggregator platform was founded by Goyal and Pankaj Chaddah as Foodiebay in 2008 and was renamed Zomato on January 18, 2010.
India has seen just a handful of Internet companies going public in the last two decades. Apart from Zomato, Paytm, Policybazaar, Nykaa, and Delhivery are also firming up plans for a public listing, even as there is a buzz of Flipkart and Freshworks listing in the US. These IPOs will be the indicators of how successful India's booming startup economy is and success could lead to more capital inflows into private markets.
Earlier this week, the company also signed up a deal to invest $120 million in online grocery firm Grofers. The approval for the deal is pending with the Competition Commission of India.
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