Zomato IPO fully subscribed on Day 1

With the initial public offering (IPO) of Indian food tech giant Zomato fully subscribed on its launch day yesterday, it marks a new milestone for India’s online startup ecosystem. While many other online firms, notably, Naukri (InfoEdge), Indiamart and even Infibeam have had successful IPO’s earlier, the sheer size ( Rs 9375 crores) and breadth of Zomato’s reach marks it out as a play on the Indian consumer market. 

At the close of its day 1 yesterday, the issue was subscribed 1.05 times with the company receiving bids for 75.6 crore shares out of the 71.92 crore shares on offer.  

The company had already allocated around 55.22 crore shares out of the total 130.21 crore shares offered in the IPO on July 13 to anchor investors. Zomato company had secured Rs 4,196 crore from a total of 186 anchor investors including the likes of Tiger Global, Goldman Sachs, Blackrock Global Investments, JP Morgan Funds, T Rowe Price, Steadview Capital and Baillie Gifford, and multiple mutual funds among others on Tuesday before the offer went live on Wednesday morning.

As per the data released by the Bombay Stock Exchange(BSE), the portion allocated for Qualified Institutional Buyers (QIBs) reserved for Foreign Institutional Investors (FIIs), Domestic Financial Institutions(Banks/ Financial Institutions(FIs)/ Insurance Companies) & Mutual Funds was subscribed 98%. Foreign Institutional Investors (FIIs)  led the pack, bidding for nearly 36.85 crore shares out of the total 38.1 crore shares in the QIB portion of the offer.

The portion allocated for retail investors was only 9.95% of the total offer, considering the size of the offer, but as the most oversubscribed portion at the end of the first day, retail investors clearly want a piece of the pie too. The retail investors’ portion was subscribed nearly 2.69 times as the company received bids for nearly 35 crore shares for the 12.95 crore shares on offer.

The quota reserved for Non Institutional investors and Zomato employees remained relatively cold and the company received bids for only 13% and 18% of shares for their respective portions.

The successful listing will be a wealth creation event not just for its early Investors like Info Edge but for the leadership team and employees holding ESOPs. For instance, the Zomato stock held by FoodieBay ESOP Trust and Co-founder/CEO Deepinder Goyal is worth nearly Rs 2127 crore and Rs 2808 crore respectively at these valuations.

Other co-founders Akriti Chopra and Gunjan Patidar hold outstanding ESOPs worth Rs 90 crore and Rs 116.8 crore respectively. As per Fintrackr estimates, the outstanding ESOPs held by the 10 key managerial personnel identified in the offer document are worth over Rs 652 crore at cut off price.

With several internet economy companies including Paytm, Delhivery, Nykaa, MobiKwik and CarTrade set for the public markets too, 2021 could yet go down as the year Zomato led India’s internet startups to the next level of penetration, reach and market validation.