Zomato is likely to raise $750 million to $1 billion through its planned initial public offering (IPO) – without investor exits or share sales, sources told The Economic Times.
The food delivery startup would be among the first Indian tech startups to go public in 2021.
Sources told the paper that Zomato co-founder and CEO Deepinder Goyal had told employees that the IPO would “most probably be 100 percent primary offering,” as investors would want to keep long term “upshot from the stock” in mind.
“This means the company will end up raising more capital, rather than shareholders offloading stock in the open market,” Goyal said while addressing staff during a town hall this week.
Moneycontrol could not independently verify the report.
"No existing shareholder is willing to sell any shares in our IPO… People think that Zomato will be a $50 billion company in five years (I hope) and it will be unwise to sell shares right now,” Goyal added.
Zomato’s existing investors include names such as Tiger Global, Temasek Holdings, Sequoia Capital and Info Edge (India). Their decision to not sell shares at IPO means that they, and other investors, would not make returns immediately, the report noted.
Zomato is expected to launch its IPO around June 2021 for a valuation of $6-8 billion. Its Investors’ backing will help against strong competition from Swiggy – which is also raising fresh capital of $800 million.
Zomato did not respond to queries, the report said.
Moneycontrol first reported on August 9, 2020 that Zomato was looking to clinch big-ticket investments from the likes of Tiger Global and Temasek ahead of a targeted IPO next year. The report also indicated that the firm was looking to reduce its cash burn and get closer to profits.
The Gurugram-based online restaurant aggregator and its main competitor Swiggy have struggled like other businesses because of the downturn from the COVID-19 pandemic.
Zomato laid off workers, cut salaries and withdrew from a raft of cities during the lockdown. But, it has since recast its business, including sharply reducing discounts for food delivery and introducing contactless dining, to survive the economic fallout of the pandemic.