Zomato IPO subscribed 36% in early hours, investors across segments bid

On Wednesday, Zomato, a food delivery platform, witnessed the initial public offering (IPO) subscription at 36% in the initial hours.

As per the stock exchange data, the offer got proposals for 26.10 crore equity shares for an IPO size of 71.92 crore.

Retail investors got 1.91 times the portion booked for them. Against 12.95 crore shares booked for retail individual investors, 24.76 crore shares were tendered by 13.30 hours.

Non-institutional investors placed in proposals for 7% against their booked portion.

The segment reserved for employees was subscribed 6%, while qualified institutional buyers have placed in proposals for 2.69 lakh equity shares against their booked part of 38.88 crore equity shares.

IPO shares, India’s major in 2021, are being extended in a price range of Rs. 72 (US$ 0.97) – Rs. 76 (US$ 1.02) per share.

On July 13, a day prior to the issue opening, Zomato has already organised Rs. 4,196.51 crore (US$ 562.49 million) from 186 anchor investors. The IPO size has been set to Rs. 5,178.49 crore (US$ 694.11 million) from previous Rs. 9,375 crore (US$ 1.26 billion).

The firm, supported by Jack Ma's Ant Group Co, is the first from a long list of unicorn start-ups in India to launch an IPO. It is also the first among online food aggregators in the country.

The IPO is expected to take Zomato’s valuation at Rs. 64,365 crore (US$ 8.63 billion), which is expected to be more than the collective market capitalisation of five listed fast food and restaurant corporations - Barbeque-Nation Hospitality and Speciality Restaurants, Jubilant FoodWorks Ltd. (the franchise for Burger King India, Domino's Pizza in India), and fast food restaurant holding firm Westlife Development Ltd.

According to the data provided in the draft red herring prospectus, the Zomato IPO includes a fresh issue of equity shares worth Rs 9,000 crore (US$ 1.21 billion) and an offer-for-sale (OFS) worth Rs. 375 crore (US$ 50.26 million) by current investor Info Edge (India) (the parent company of Naukri.com).

The restaurant aggregator has stated it will leverage the net earnings from the fresh issue for funding organic and inorganic growth projects (Rs. 6,750 crore (US$ 904.75 million)) and general corporate objectives.

As of March 2021, Zomato was operational across 525 cities in India, with 3,89,932 active restaurant listings along with a presence across 23 international countries.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.