Zomato wants to go public in the first half of 2021 and the company has started preparing for its potential listing in overseas stock exchange, likely in the US or Singapore. In that order, the company is set to see a secondary transaction in which its co-founder Pankaj Chaddah along with up to two dozen existing and former employees are expected to sell their stocks, said three people aware of the details of this potential transaction.
“The size of the secondary transaction will be in the range of $50-60 million. Existing backers including Tiger Global, Kora Investments and a couple of new investors are in conversation to buy shares in the transaction,” said one of the sources on condition of anonymity.
If the deal goes through, this would be a second secondary transaction in Zomato this year. Last month, ex-Zomans had sold out $30 million worth shares to investors. “Unlike previous secondary transactions, there is no discount in the valuation and investors will buy shares at a valuation of $3.5 billion,” said the second source. The person requested not to be named as talks are private.
Zomato declined to offer comment for the story while Chaddah didn’t respond to Entrackr’s detailed questionnaire. We will update the story as and when he responds.
Sources emphasised that Chaddah would sell over 35% of his current holding in the potential secondary transaction. “Chaddah would dilute $20-25 million with stake in the transaction,” added the person mentioned above. As per the latest list of shareholders submitted by the company with MCA, Chaddhah holds nearly 1.5% stake in the company he co-founded a decade ago.
Chaddah moved from Zomato in 2018 and currently runs mental fitness platform Mindhouse. Entrackr had exclusively reported about Mindhouse’s offerings and its seed financing round.
Apart from giving a partial exit to Chaddah, the secondary transaction is aimed to reduce small stakeholders from Zomato’s cap table, added sources.
Zomato has been on a fundraising spree since August. The company has raised about $216 million in the past two months and sources indicate that it may raise up to $500 million in the ongoing Series J round. “Existing investors including Tiger and a couple of new investors may put in more capital in what seems to be a pre-IPO round,” said the first person quoted in the beginning of the story.
In August, Zomato allotted 12,015 equity shares to its employees’ ESOP trust through its CFO Akriti Chopra who acts as the trustee. If subscribed completely, the ESOP subscription scheme currently has a total stake of 6.77%.
The preparation of the company’s public listing could also be noticed from the elevation of Akshant Goyal as a new chief financial officer or CFO. According to sources, Goyal’s elevation took place early this week and former CFO Akriti Chopra will have a larger role in the organisation.
Zomato also confirmed Goyal’s new role to Entrackr. He has been with Zomato for over three and a half years as vice president. Until now, he was heading the corporate development division for the company.