Zomato files for $1.1 billion IPO

Might consider pre-ipo placement of $200 mn

Food-delivery platform Zomato on Wednesday took the first step towards public listing by filing its draft red herring prospectus (DRHP) with the Securities and Vxchange Board of India (Sebi).

The proposal to raise ~8,250 crore, or over $1.1 billion, through its initial public offering (IPO) makes this one of the largest by a consumer internet company in India.

The IPO offer includes a fresh issue of ~7,500 crore, and an offer for sale worth ~750 crore by Info Vdge, the largest investor in Zomato with 18.55 per cent pre-offer equity share capital in the company.

Zomato had said it might consider a pre-ipo placement worth ~1,500 crore (around $200 million) prior to filing the DRHP with the registrar of companies.

Sanjeev Bikhchandani, cofounder of Info Vdge, said in response to a congratulatory tweet message on Twitter: “Actually the credit should go to the Zomato team. @deepigoyal @zomato. Our skill lies in merely identifying great teams and putting in money. We are grateful that these great teams allow us to invest. Money is a commodity. Vntrepreneurship is rare.”

Zomato said in the DRHP it expected to use ~5,625 crore from the net proceeds to fund its organic and inorganic growth, which includes customer and user acquisition, delivery and technology infrastructure, and acquisitions.

Among its inorganic initiatives, Zomato said it would continue to evaluate opportunities for acquisition and strategic initiatives. It said it had benefited significantly from acquiring Uber’s delivery business in FY20 and logistics provider Carthero in FY18.

Market sources expect Zomato to go public later this year at a valuation of $7-8 billion. Sebi takes two-three months to give approval for the DRHP and after that the company can hit the market with an IPO within a year.

Gurugram-based Zomato bought Uber Eats in January last year for about $206 million, giving Uber a 9.9 per cent stake in it.

In the run-up to its IPO, Zomato raised $250 million (over ~1,800 crore) from Tiger Global, Kora, and others, valuing the online food-ordering platform at $5.4 billion.

This came after a $660million funding round it closed in December at a valuation of $3.9 billion from 10 new investors including Tiger Global, Kora, Luxor, Fidelity (FMR), D1 Capital, Baillie Gifford, Mirae, and Steadview.

Chief Executive Officer Deepinder Goyal had said at the time the company was in the process of closing a $140million secondary round.

According to the DRHP filing, Zomato’s revenue from operations nearly doubled to ~2,604.7 crore for FY20, even as its losses widened by 136 per cent to ~2,385.6 crore during this period.

The firm last week expanded its board of directors and added four women to it.

Zomato converted itself from a private company into a public limited one a few weeks ago.