Zomato IPO – Info Edge makes sale size to Rs 375 crore

InfoEdge, which runs online classified recruiter Naukri.com, has decreased the size of its offer for sale in Zomato’s initial public offering by half to Rs 375 crore. Previously, the offer for sale was valued at Rs 750 crore.

“The revised offer for sale by the company would comprise of such number of equity shares held by the company in Zomato, as would aggregate upto Rs 375 crore, the terms and conditions of which will be specified in the red herring prospectus and the prospectus filed in relation to the offer, and in other Offer related documents and agreements,” Info Edge said in its BSE filing on July 4.

The Securities and Exchange Board of India (SEBI) has formally approved Zomato’s initial public offering proposal (IPO).

Zomato filed a draught red herring prospectus (DRHP) with Sebi in April for its Rs 8,250-crore initial public offering (IPO), which will include a fresh issue of Rs 7,500 crore and an offer for sale of Rs 750 crore by current investor Info Edge.

The company intends to use the net proceeds from the Rs 5,625 crore fresh issue (including pre-IPO proceeds) to fund organic and inorganic growth objectives, as well as general corporate purposes.

Additionally, read – Food delivery services Zomato and Swiggy face a threat from a restaurant association that has petitioned the CCI over a discount issue.

The meal delivery business collected $250 million in its pre-IPO primary financing a few months ago from investors including Kora Management, Tiger Global, Fidelity, Dragoneer, and Bow Wave at a valuation of $5.4 billion.

Following that, InfoEdge, one of Zomato’s early investors, announced that its effective interest in the company has increased to 18.4 percent.

On the BSE, Info Edge shares closed at Rs 5,466.90, up 1.87 percent on Monday.

In Summary

Zomato will be the first of India’s multibillion-dollar businesses to enter public markets. Paytm, a payment services startup; Flipkart, an e-commerce company now acquired by Walmart Inc.; Policybazaar, an online insurance platform; and Nykaa, a cosmetics and apparel shop, are also preparing to go public.

Zomato is seeking a $10 billion valuation for its first public offering, citing a jump in online food ordering, restaurant bookings, and subscriptions for Zomato Pro businesses, according to two individuals familiar with the matter.

According to an Economic Times, Zomato’s initial public offering is expected to begin trading on July 19. Additionally, it stated that the price band is anticipated to be between $70 and $72 per share.

Zomato’s initial public offering (IPO) will see a 10-15% dilution, mostly through a fresh issue of shares and an offer for sale (OFS) by early investor Info Edge (India) Ltd.

Zomato intends to use the profits from the IPO to fund acquisitions and organic expansion.

Info Edge lowered the size of its OFS in Zomato’s initial public offering by half, to 375 crore from 750 crore previously intended.

The global coordinators and book running lead managers for the issuance are Kotak Mahindra Capital Company, Morgan Stanley India Company Pvt Ltd, and Credit Suisse Securities (India) Pvt Ltd.

Numerous significant asset management organisations and existing investors like as Temasek may participate as anchor investors in Zomato’s initial public offering.

Among its current investors are Info Edge (18.55 percent), Uber BV (9.13 percent), Alipay Singapore Holding Pte Ltd (8.33 percent), Antfin Singapore Holding Pte Ltd (8.20 percent), Tiger Global (6 percent), Sequoia Capital (5.98 percent), co-founder Deepinder Goyal (5.51 percent), and a Temasek Holdings subsidiary (3.65 percent).

It generated revenue of 1,367 crore in the first three quarters of FY21. However, expenses totaled approximately 1,724 crore, resulting in a deficit of 684 crore. Revenue climbed by 96% to 2,743 crore in the fiscal year ended March 2020, up from 1,398 crore the previous year.

As merchant bankers for the public offering, BofA Securities India Ltd and Citigroup Global Markets India Pvt Ltd have been selected. The company’s shares will be listed on the BSE and NSE.

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Krishna Rath is a SEBI Registered Investment Adviser, and since 2015 has been educating netizens on investments and insurance. Krishna is a fee only SEBI RIA and is Odisha's first SEBI RIA. With background in IT, Krishna is changing the advisory space with new innovations in AdvisoryTech.

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