Zomato’s public offering is a “watershed moment for the Indian markets”, say experts. The online food delivery platform’s initial public offering (IPO) will open on Wednesday.
“Zomato becomes the first major start-up to get listed which will pave the way for many other such listings. Zomato is a technology enabled food aggregator platform that connects customers, restaurant partners, and delivery partners, serving their multiple needs”, Aditya Kondawar, COO, JST Investments told Livemint.
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Zomato is looking to raise over Rs 9,000 crore from the IPO, at the price ranging between Rs 72 and 76 per share. The company will have 75% of the portion reserved for qualified institutional buyers (QIB) while 15% is reserved for non-institutional investors (NII). However, 10% of the public issue is reportedly open for retail investors to bid, translating to merely Rs 937 crore. For its employees, Zomato has reserved 65 lakh equity shares.
The impact of Zomato IPO listing
Zomato’s IPO will assess Indian investors’ appetite for unicorns, as the online food delivery giant works in a fairly competitive market, said a note by Anand Rathi Research.
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“In FY20, Zomato generated marketplace gross order value of about $1.54 billion, around 2.3 per cent of the market and we believe that the company is in the early phases of broad market adoption,” said research analyst Shobit Singhal in the note.
Zomato has no promoter and is backed by Ant Financials, Info Edge, Sequoia, and Uber as some of its investors. The company, which had applied for the listing in April this year, received market watchdog SEBI’s nod on July 5.
Zomato, in the recent round of fundraising, was valued at $5.4 billion post-money. Tiger Global, Fidelity, and Kora Management were among the latest investors in Zomato pumping in $250 million. The experts believe that the company’s IPO would mark the “first meaningful Internet listing in India”.
“Zomato IPO would mark the first meaningful Internet listing in India. With >80% contribution to revenues, food delivery is the bedrock, a two-player market now although more competition is possible,” said foreign brokerage and research firm Jefferies earlier this year, adding food delivery was the bedrock with over 80% contribution to revenue.