Zomato on course for a billion-dollar IPO without investor exits

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Mumbai: Zomato, the food-delivery app poised to be the primary amongst a rising tribe of Indian tech startups eyeing a list this 12 months, is anticipated to lift $750 million to $1 billion by way of its preliminary public providing (IPO), stated two folks acquainted with the event.

However in contrast to conventional IPOs, no investor is more likely to exit or take cash off the desk by promoting their shares.

Deepinder Goyal, co-founder and chief govt officer of Zomato, instructed staff this week that the IPO will most likely be a 100% main providing, retaining in thoughts the long-term upshot that the traders count on from the inventory. This implies the corporate will find yourself elevating extra capital, quite than shareholders offloading inventory within the open market, Goyal stated.

“No current shareholder is prepared to promote any shares in our IPO… Individuals assume that Zomato will probably be a $50 billion firm in 5 years (I hope) and it will likely be unwise to promote shares proper now,” Goyal stated at a latest city corridor. ET has reviewed the communication independently.

With Zomato’s traders not opting to promote any shares within the IPO course of, current backers which embody the likes of Data Edge (India), Sequoia Capital, Temasek Holdings and Tiger World, amongst others, wouldn’t rake in any returns instantly.

The event is important as a result of it creates an enormous warfare chest for Zomato in its struggle towards a well-capitalised competitor like Swiggy, which too
is raising around $800 million in contemporary funds.

Zomato is seeking to go public by June at a valuation of anyplace between $6-8 billion,
ET reported earlier. When contacted for this story, Goyal provided no feedback on the IPO particulars.

Pre-IPO Spherical

The corporate, which began off as a restaurant discovery and overview platform,
recently closed a $250 million main funding spherical with one other $250 million of shares being offered by current traders like China’s Ant Monetary, ET reported on January 27. This transaction valued the Gurugram-based agency at $5.4 billion—considerably larger than the $3.9-billion valuation in December when it had
closed a long-drawn $660 million fundraising.

Buyers are hopped-up on Zomato’s prospects of going public, following
the successful IPO of SoftBank-backed DoorDash in December, when the US-based food-delivery startup listed at $182—about 78% larger than its IPO worth—on New York Inventory Change. DoorDash, which raised round $3.4 billion within the preliminary share sale, was valued at $34.2 billion, greater than double the $15 billion valuation it commanded within the personal market a 12 months in the past.

On Tuesday, DoorDash’s market capitalisation stood at $53.6 billion.

Zomato and rival Swiggy
have benefited from a revival within the on-line food-ordering area after a couple of robust months final 12 months as a result of nationwide coronavirus lockdown.

Whereas saying the $660 million fundraise, Zomato’s Goyal had stated that the corporate
was on track to report its best-ever month-to-month gross sales in December. “We at the moment are clocking round 25% larger GMV (gross merchandise worth) than our earlier peaks in February 2020,” he had tweeted. “The tailwinds for meals supply companies are clearly seen, and we consider that the expansion of the sector will speed up post-vaccine.”

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