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Zomato Files For Rs 8,250 cr IPO

The issue consists of fresh issue of shares worth Rs 7,500 crore and an offer-for-sale worth Rs 750 crore

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Leading restaurant aggregator and food delivery company Zomato has filed an Initial Public Offering or IPO with the market regulator on April 28. The company had mentioned before that it will look forward to "go public" in the first half of 2021. The company converted itself to a public limited company from a private company a few weeks back and is now named as Zomato Limited.

As per the documents, Zomato aims to raise up to Rs 8,250 crore from its initial public offering. The issue consists of fresh issue of shares worth Rs 7,500 crore and an offer-for-sale worth Rs 750 crore from its existing shareholder. The offer for sale will be solely completed by its existing shareholder Info Edge. A day earlier, Info Edge announced that they will offload shares worth Rs 750 crore in the upcoming IPO.

Info Edge currently holds a 18.5 per cent stake in the company after Zomato carried a pre-IPO fundraise of $250 million at a valuation of $5.4 billion from ace investors such as Kora Management, Tiger Global, Fidelity, Bow Wave, and Dragoneer.

The company has also stated that it might consider a private placement of Rs 1,500 crore before the filing of red herring prospectus in consultation with its advisors, as per the offer document.

Further, the delivery giant has proposed to use its net proceeds from the issue for funding of organic and inorganic growth initiatives and to fulfill general corporate purposes. The amount for general corporate purpose will not exceed 25 per cent of the net proceeds, as per the DRHP. A total of Rs 5,625 crore will be used for organic and inorganic growth which includes Customer and user acquisition, Delivery and Technology infrastructure and further in business acquisitions.

“We need to continue to invest in three core areas for the growth of our business which include a) customer and user acquisition, b) delivery infrastructure, and c) technology infrastructure. We have made these investments in the past, and we expect these to continue to be critical for the growth of our business in the future,” Zomato said.

Previously, the company has acquired CTPL and Tonguestun in 2018, and Uber Eats in 2020. “We expect to continue to evaluate and consider a wide array of strategic alliances, investments and acquisitions in line with our overall business strategy,” the company said.

Tracking the financials, as per the document, the company’s revenue from operations stood at Rs 1,301 crore for the nine months ended December 2020. The company also claimed that its revenue from operations grew from Rs 466 crore in FY 2017-18 to Rs 2,604 crore in FY’ 2019-20.

“As lockdowns in response to the covid-19 pandemic eased in India towards the end of May 2020, our food delivery business started recovering and in the third quarter of 2020-2021 fiscal we recorded the highest goods order value achieved by us in any quarter till December 2020," Zomato said in its DRHP.

However, the company has posted losses of Rs 682 crore in the nine months period ended December 2020, Rs 2,385 crore in FY 19-20, and Rs 106 crore in FY 17-18.

 Zomato is a restaurant aggregator and food delivery company founded by Pankaj Chaddah and Deepinder Goyal in 2008. The company provides information, menus and user reviews of restaurants as well as food delivery options from partner restaurants in select cities. As of December 31, 2020, Zomato is present in 526 cities in India, with 350,174 Active Restaurant Listings. 

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