Food delivery platform Zomato will be floating its initial public offering (IPO) to raise Rs 9,375 crore, with the shares expected to be priced at Rs 72-76 apiece. In its red herring prospectus, the company said that Rs 9,000 crore will be a fresh issue and an offer for sale of Rs 375 crore by investor Info Edge. The offer will open for subscription on July 14 and close on July 16.
The offer initially put at Rs 8,250 crore was subsequently increased to Rs 9,375 crore. This, Zomato’s chief financial officer Akshant Goyal and co-founder Gaurav Gupta said, was increased as they had more flexibility from investors.
In a press conference on Thursday, July 8, the company said it is looking at a post-issue valuation of Rs 64,365 crore at the upper end of the price band and added that with the IPO, its cash reserve will be roughly Rs 15,000 crore. Earlier this month, the Gurugram-headquartered startup received the go-ahead from markets regulator SEBI after filing preliminary papers in April. The company said that proceeds from the fresh issue would be used towards funding organic and inorganic growth initiatives; and general corporate purposes.
In its press conference, Zomato said that funds raised from the fresh issue will be used towards three things — organic growth (to continue to invest in new customer acquisition, growing delivery infrastructure, and the tech), inorganic initiatives through investments (such as Grofers) or acquisitions, and up to 25% towards general corporate purposes.
When asked about the National Restaurant Association of India reaching out to CCI over anti-competitive prices of aggregators, Zomato said they are yet to receive anything, and that some concerns are “misplaced”.
Furthermore, they also said that, which entered the market as Amazon Food, has had no major impact on market share so far. Amazon Food is currently only operational in Bengaluru.
In another development, Zomato said that it will be launching grocery delivery on the app as well, which it had started during the lockdown last year and subsequently discontinued. This comes after the company picked up a minority stake in grocery delivery company Grofers. Zomato is already selling nutraceuticals on the app.
Zomato’s financials as part of its red herring prospectus showed that revenue fell by 23% year-on-year in FY21, but losses narrowed as well. The company’s losses were reduced from Rs 2,363 crore to Rs 812 crore. CFO Akshant Goyal said during the press conference that if the impact of the first two quarters is removed (when the lockdown was enforced), business is growing now.
In February, Zomato had raised over Rs 1,800 crore in funding from Tiger Global, Kora and others, valuing it at $5.4 billion.