Zomato’s public offering oversubscribed on day 1
Shares in food delivery app Zomato, one of India’s biggest tech startups that launched its initial public offering (IPO)ON Wednesday, was subscribed 1.05 times at the end of the first day, according to the data available with the Bombay Stock Exchange (BSE).
The shares, which are to be allocated to qualified institutional buyers and non- institutional investors, were subscribed 98 per cent and 13 per cent, respectively. Shares of retail individual investors were subscribed 2.69 times, the BSE data showed.
In the employees’ segment, shares were subscribed around 18 per cent amid analysts’ growing concern over the high valuation of the loss-making company, which is backed by Chinese billionaire Jack Ma’s Ant Group.
Zomato’s three-day offering, which ends on Friday and with shares priced between ₹72 to ₹76 per share, is expected to take the company’s valuation to $9 billion. Trading is likely to begin on both the BSE and National Stock Exchange (NSE) on July 27.
The IPO comes at a time when Indian and global markets are at near record highs.
On Wednesday, the 30-share BSE Sensex closed at 52,904.05 points, which is 134.32 or 0.25 per cent higher than the previous day. The broader 50-share Nifty closed at 15,853.95 points, 41.60 or 0.26 per cent higher versus Tuesday.
Earlier, Zomato had allotted shares worth $562.3 million to about 200 foreign and domestic investors.
Keeps ‘delivering’ in UAE
On March 4, 2019, Zomato sold its business in the UAE to Germany’s Delivery Hero Group for around $172 million. The deal was aimed to give the startup fresh capital to invest in more lucrative markets such as India.
The UAE was Zomato’s first global foray in 2012.
The restaurant guide and online food-ordering company also launched its premium service, Zomato Gold, in the UAE in 2017. And the UAE is not the first market that Zomato exited.
In 2016, it had scaled back from nine out of 23 international markets such as the US, the UK, Sri Lanka, Ireland, Chile, Canada, Brazil, Italy and Slovakia, and four Indian cities, including Lucknow, Kochi, Indore and Coimbatore, to reserve cash.
However, Zomato has not exited from the UAE. Though Delivery Hero owns the business, Zomato continues to operate it. Delivery Hero has made an equity investment of $50 million in Zomato.