Zomato IPO: Nine things you must know about the issue

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Food delivery giant Zomato has finally announced its initial public offering (IPO) plan. Here are 9 things that you should know about the IPO.

Open and close date: The offer will open for subscription on July 14 and the bidding will close on July 16. The anchor book, if any, will open for a day before the issue opening, i.e. July 13

Issue size: The Rs 9,375-crore public offer comprises fresh issuance of equity shares of Rs 9,000 crore, and an offer for sale of Rs 375 crore by existing selling shareholder Info Edge.

The public issue includes a reservation of up to 65 lakh equity shares for employees of the company.

Price band: The price band for Zomato has been fixed at Rs 72-76 per share.

Lot size: Investors can bid for a minimum of 195 equity shares and in multiples, thereafter, translating to a minimum bidding amount of Rs 14,820 at the higher end of the price band. A retail investor can at max apply for 13 lots or 2535 shares for 1,92,660.

Objective of issue: The food delivery giant will utilise its net proceeds from fresh issue for funding organic and inorganic growth initiatives (Rs 6,750 crore); and general corporate purposes.

About the company: Zomato is one of the leading online food service platforms in terms of the value of food sold as of Dec 31, 2020. Its B2C offerings include food delivery and dining-out services where customers can search and discover restaurants, order food delivery, book a table, and make payments for dining out at restaurants while under the B2B segment, it generates revenue from Hyperpure (supply of high-quality ingredients and kitchen products to restaurants) and Zomato Pro, customer loyalty program.

As of December 31, 2020, Zomato has established a strong footprint across 23 countries with 131,233 active food delivery restaurants, 161,637 active delivery partners, and an average monthly food order of 10.7 million customers.

For nine months ended December 31st, 2020, the company reported total revenue of Rs 1,367.65 crore compared to Rs 487.04 crore in FY18. It is a cash-burning company as it posted a loss of Rs 682.2 crore as of December 31, 2020, compared to a loss of Rs 106.91 crore in FY18.

What’s in it for retail investors: Up to 75% of the total offer has been reserved for qualified institutional buyers, up to 10% for retail investors, and the rest 15% for non-institutional buyers.

Book Running Lead Managers and Registrar to the IPO: The book running lead managers to the issue are BoA Merrill Lynch, Citigroup Global Markets India, Credit Suisse Securities (India), Kotak Mahindra Capital and Morgan Stanley India. The registrar to the issue is Link InTime.

Issue timeline: The issue is likely to finalize the basis of allotment by July 22, and the initialization of refunds will take place by July 23. While the credit of equity shares to depository accounts of the allottee will be done on July 26. The company is expected to make its stock market debut on July 27, 2021.