Zomato, India’s most valuable food delivery company, is seeking an IPO valuation of $10 billion amid a surge in online food-ordering, restaurant-bookings and subscriptions for Zomato Pro businesses, two people familiar with the development said.
The latest valuation is significantly higher than the $8 billion the company was seeking about three months ago. Zomato is expected to launch its share sale later this month to become the first of India’s top unicorns to go public.
“The IPO pricing for Zomato will be done in line with the rise in investor demand that values the company higher than the levels three months back,” one of the two people cited above said, requesting anonymity.
Zomato will be the first among India’s mega startups to access public markets. Payment services company Paytm; Flipkart, the e-commerce firm now owned by Walmart Inc.; online insurance platform Policybazaar and cosmetics and garments retailer Nykaa are also readying to go public.
The IPO rush comes as the pandemic has prompted hordes of people to rely on the internet to order everything from groceries to biryani to medicines. Many experts reckon that the habits picked up during the past year are unlikely to change much.
The Zomato IPO will see a dilution of 10–15%, largely through a fresh issue of shares and an offer for sale (OFS) by its early investor Info Edge (India) Ltd.
“The total value of shares to be offered in the IPO plus OFS could be around $1.5 billion, which, too, is an increase from the original plan to raise around $1.1 billion,” the first person said.
Zomato’s existing investors include Info Edge (18.55%), Uber BV (9.13%), Alipay Singapore Holding Pte Ltd (8.33%), Antfin Singapore Holding Pte Ltd (8.20%), Tiger Global (6%), Sequoia Capital (5.98%), co-founder Deepinder Goyal (5.51%), Temasek Holdings subsidiary (3.65%) and a few others.
Apart from the fact that Zomato’s business has seen a surge in the past six months, potential investors are also enthused by the demand for shares of business-to-consumer startups and that Zomato will be the first food-tech unicorn in India to be listed on a stock exchange, the people cited above said.
“Several large asset management firms and some existing investors such as Temasek could be coming as anchor investors in Zomato’s IPO,” said the first person.