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Zomato revealed its IPO plan that worths $1.1 billion

Finally, Zomato has moved the Securities and Exchange Board of India for its much-awaited public market debut. This well-known food delivery unicorn has even filed the draft are herring prospectus for around $1.1 billion which is the initial public offering with the bourses.

Now, Zomato is on the verge of offering equity shares worth RS. 8,250 crore which will be a fresh issue, whereas Rs. 750 crore is an offer for sale from one of its earliest backers Info Edge.

The startup IPO was founded in the year 2008 by Deepinder Goyal and Pankaj Chaddah who has been one of the most awaited ones in the Indian tech ecosystem. However, the firm has also made several changes in its management as well as administration ahead of the market offering. Further, from naming Goyal as a managing director for the next five years to converting itself from a private company to a public limited company Zomato Limited.

However, Zomato last valued at around $5.4 billion which enhanced the funds over the last few years as it was preparing for the market debut.

Recent fundraising spree

The company even mentioned that they might go for pre-IPO placement for an aggregate amount that is not exceeding worth Rs. 1,500 crore. The company mentioned, “The Pre-IPO Placement if undertaken, will be at a price to be decided by our Company in consultation with the Managers and will be completed before the filing of the Red Herring Prospectus with the RoC.”

Well, this food delivery giant has now grown at least by three times in the last four years. However, the revenue at the end of December 2020 for the preceding 9 months was Rs. 1,301crore when compared to Rs. 460 crore for the fiscal year ending March 2018.

The company mentioned that they are expecting the costs for increasing over time “losses will continue given significant investments expected towards growing our business”.

Amid the grueling second wave of the Covid-19 pandemic in India, Zomato has come with IPO. This has disrupted the restaurant industry but even boosted online food delivery. Over the last year, Zomato had mentioned that Covid-19 has dragged it towards profitability and it was found in their DRHP filing.

Zomato CEO Deepinder Goyal mentioned, “In terms of the size of the business, COVID-19 has set us back by a year or so – but a year is only a small blip when you are building a company for the next 100 years,”

Role of Zomato in India online food market

Along with the top rival Swiggy, Zomato plays a major role in the food industry. According to the CLSA report, it is expected that the Indian food industry is assumed to grow around $11 billion in the next five years for which Swiggy is now holding a 47% market share whereas Zomato holds 45%.

As a new entry Amazon is also expected to make a remarkable place in the market. In January 2020, Zomato has almost acquired one of its rivals UberEats. Well, the growing competition in the food industry is not overlooked by Zomato in its DHRP filing.

The company said, “Our current and future competitors may enjoy competitive advantages, such as greater name recognition, longer operating histories, greater category share in certain markets, market-specific knowledge, established relationships with local restaurants or local delivery businesses and larger existing customer bases in certain markets, more successful marketing capabilities, and substantially greater financial, technical, and other resources than we have.”

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