Zomato IPO: The IPO will include an offer for sale of Rs 750 crore from Info Edge and a fresh issue of Rs 7500 crore.
Zomato IPO: Online food delivery app Zomato has announced its much-awaited IPO by June. Zomato plans to raise Rs 8250 crore through IPO. The food delivery app has filed a Draft Red Herring Prospectus (DRHP) with market regulator SEBI for its proposed IPO. According to DRHP, Zomato's IPO will consist of fresh equity shares and Offer for Sale (OFS) from its existing shareholder Info Edge Limited. Info Edge Limited is the parent company of the job portal Naukri.com It is believed that Zomato's IPO can be the biggest IPO of the last one year in the stock market. In true sense, this will be the first IPO of a big startup that will come up for listing.
Zomato says that before the IPO, it is also considering private placement of Rs 1500 crore. In such a situation, it is possible that the size of the fresh issue currently proposed by the company may be reduced. DRHP is the first document to be submitted to SEBI for IPO. In this, the details related to the company are given. The date of formation of the company, details of the business model of the company and the associated risk appetite.
What is the size of the IPO
The company will raise up to Rs 8250 crore through the issue. There is a plan to raise Rs 7500 crore through fresh issue, while Rs 750 crore will be raised through offer for sale. In the offer for sale, investors exit by selling their share. InfoEdge has already announced that it will sell its stake worth Rs 750 crore in the issue of Zomato. One of the reasons for the large size of the issue is that after listing, the old investors will sell the shares after getting a good price. The face value of every share that comes in the offer has been kept at Re 1.
What's different in this IPO
It will be different from the general issue in that it will come through the rules of IPO fixed for loss-making companies. In such an IPO, the quota of retail investors is less as compared to the route of profitable companies. In normal IPO, there is a fixed quota of 35 percent shares for retail investors.But, since Zomato is bringing the IPO at a loss, only 10% of the shares will be for retail investors, because the company is bringing the IPO at a loss, so investors can be at risk. That is why SEBI has deliberately kept the quota of retail in such companies low.
Issue possible by June
Generally, 21 working days are fixed by SEBI for approval of the issue. If all goes well and there are no major hurdles, the issue can be cleared by the end of May. Whereas the issue can come in the market by June if the market conditions are good. The company has written in the purpose of raising money that the money raised from the issue will be used for organic and inorganic growth. Organic growth means achieving growth by growing the existing business.Whereas through organic growth, the business size has to be increased by buying other companies. The company has written that the IPO proceeds will be used to cover the cost of adding customers and technically strengthening the platform.
Where's the risk with growth?
The company expects that the company's business will continue to grow with increasing urban population, increasing number of working families, increasing penetration of internet and smartphones. Whereas in the risk part, the company has said that the business is in loss and it may have to invest more for growth going forward, in which it is possible that if the company is not able to increase the income against investment and expenses, then it may remain in loss. Apart from this, in the event of corona crisis or other such epidemic, a big challenge may arise in front of the company.
The loss of restaurant partners and delivery partners can also create problems for the company. Apart from this, things like data theft, system failure, sudden change in rules, negative media coverage, competition have also been included in the risk factor. The company has informed that a liability case of about Rs 276 crore is going on against its directors. Apart from this, some cases of taxation are also going on against the company.
Investors like Info Edge, Sequoia Capital, Uber in Zomato
Mateo includes investors like Ant Financial, Info Edge, Sequoia Capital, Uber. Recently Zomato changed itself from a private company to a public company. For this, changes were made in the Memorandum of Association. It was being considered as the next step towards IPO. On the other hand, Zomato's founder recently denied the news of IPO. However, Zomato's DRHP made it clear that the company has moved towards IPO.
| IPO Open Date | 14 July, 2021 |
| IPO Close Date | 16 July, 2021 |
| Basis of Allotment Date | 22 July, 2021 |
| Initiation of Refunds | 23 July, 2021 |
| Credit of Shares to Demat Account | 26 July, 2021 |
| IPO Listing Date | 27 July, 2021 |
Company Contact Information
Nehru Place, New Delhi – 110019.
Tel.: +91 011 4059 2373
Contact Person: Sandhya Sethia
(Company Secretary and Compliance Officer)
E-mail: companysecretary@zomato.com
Website: www.zomato.com
Corporate Identity Number: U93030DL2010PLC198141OUR
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