MUMBAI – Food delivery giant Zomato today launched its much-anticipated initial public offering to raise 93.75 billion rupees (US$1.3 billion, or RM5.46 billion), India’s biggest this year and the first of a series of listings by tech unicorns.
Zomato – which counts subsidiaries of Uber and Jack Ma’s Ant Group among its shareholders – is one of the country’s hottest tech start-ups and dominates its booming app-based food delivery space alongside rival Swiggy.
Fresh shares priced at between 72 rupees and 76 rupees were issued as part of the IPO, which closes on Friday.
Ahead of the listing, Zomato raised over 41.96 billion rupees from 186 marquee institutional investors, including global investment funds like Blackrock, Fidelity, JPMorgan and Morgan Stanley.
As of 2pm local time (0830 GMT), 10% of shares reserved for retail investors were subscribed more than two times.
But, there was lacklustre interest in the early hours of bidding for the remaining shares allocated to institutional and high-value investors.
In total, institutional investors have nearly 75% of the IPO reserved for them.
There are high expectations for the growth of the food delivery market in the country of 1.3 billion people, with Zomato and Swiggy delivery riders ubiquitous in Indian cities.
There are also concerns, however, that companies like these two – which have yet to be profitable due to high start-up and marketing costs – may be overvalued.
Zomato, which operates in 525 Indian cities with more than 32 million Indians visiting the platform each month, lost 8.16 billion rupees in the financial year ended March 2021.
“Zomato has been incurring substantial losses and may continue to incur losses in (the) near future, too, given that the business is at a nascent stage,” said Mumbai-based investment services firm Motilal Oswal in a note to clients ahead of the IPO.
Around 30 Indian companies have announced IPO plans this year, including digital payments firm Paytm, backed by Japan’s SoftBank and Ma.
Zomato’s offering, along with Paytm’s, is expected to propel India’s IPO market to its best year on record. – AFP, July 14, 2021
