Zomato invites bids at Rs 72-76 per share for its Rs 9,375 Cr IPO

Foodtech major Zomato is only a week away from its public debut. The company has filed its red herring prospectus or RHP with Bombay Stock Exchange with details of its much-awaited Initial Public Offering (IPO). 

The prospectus reveals that the shares are offered at a price band of Rs 72-76 each, making the whole issue worth between Rs 9,375 crore to Rs 11,198 crore. The issue period will be from July 14 to 16, 2021 with 1,30,20,83,333 equity shares of face value Re 1 each on offer for bids. 

Notably, Zomato has increased its fresh offer size to Rs 9,000 crore from the previous size of Rs 7,500 crore disclosed in the draft red herring prospectus filed last month. According to analysts tracking the public market, the size of the issue has been inflated due to the demand from investors.

Also, Zomato’s early backer Info Edge has reduced the size of its secondary share sale in the IPO to Rs 375 crore from Rs 750 crore.

Investors can place their bids with a minimum of 1 lot with each lot containing 195 equity shares. Identified qualified institutional investors will bid on 75% of the total offer, i.e 129,583,315 equity shares while the maximum bid quantity for non-institutional investors is 323,895,780 equity shares.

Since Zomato’s had not achieved profitability yet, the portion of the IPO to be offered to retail investors has been capped at 10% of the total offer size and retail investors will bid for stock worth between Rs 937.5 - 989.5 crore. The company has churned weighted average return on the net worth of -49.09% during the last three Fiscals

The prospectus also mentions that Zomato has onboarded five Book Running Lead Managers associated who have handled 15 issues in the past three financial years, out of which 5 issues closed below the issue price on listing date. Kotak Mahindra Bank, Morgan Stanley, Citi Bank, Credit Suisse and Bank of America and City Bank are bankers for its IPO while Link Intime India Pvt Ltd has been identified as the registrar. 

So far, Zomato has mopped up around $2.1 billion in total funding across several rounds. It had raised $250 million in a pre-IPO round at a valuation of $5.4 billion in February 2021. In the same month, seven of its stakeholders had sold stock worth over $319 million in a secondary transaction.

The stakeholders who partially exited from Zomato include Alipay, Nexus, Sunlight Fund, Sequoia Capital, Blume Ventures, and its co-founders Deepinder Goyal and Pankaj Chaddah. 

Zomato’s performance on the stock market is important for the Indian startup ecosystem as it would set a tone for several companies including Paytm, Delhivery, Nykaa, MobiKwik and CarTrade who are set for the public listing this year.