The Zomato IPO, or initial public offering, of the food delivery company will take place this week. So far, this will be the 27th public issue in 2021.
During the last 16 months, the Zomato IPO has been the second largest after SBI Card (Rs 10,355 crore), which was launched in March 2020.
Ten things you need to know before subscribing to the Zomato IPO:
1) Public Issue
In addition to the Rs 9,375-crore public offering, existing shareholder Info Edge has offered to sell Rs 375 crore in equity shares.
Up to 65 lakh equity shares will be reserved for company employees in the public offering.
2) The Zomato IPO Dates
Subscribers can subscribe on July 14 and the bidding will close on July 16. An anchor book, if any, will be available for a day before the issue opens, i.e. 13th of July.
3) Price Band
After consulting with merchant bankers, the price band for the offer has been set at Rs 72-76 per equity share.
4) Lot size and the proportion of the land set aside for reserve
Bids can be made in multiples of 195 equity shares and at a minimum of 195 equity shares. The retail investor can apply for up to Rs 1,92,660 securities at a higher price band of Rs 76 per equity share for shares worth a minimum of Rs 14,820.
The offer will be reserved for institutional buyers up to 75 percent, retail investors up to 10 percent, and non-institutional buyers up to 15 percent.
5) The issue’s objectives
Net proceeds from fresh issues will be used to fund organic and inorganic growth initiatives (Rs 6,750 crore), as well as general corporate purposes.
6) Company Profile
Customers, restaurant partners, and delivery partners are connected through Zomato’s technology platform. The company’s platform allows users to search for and discover restaurants, read and write reviews, view and upload photos, order food delivery, book a table, and make payments while dining out.
While providing restaurants with industry-specific marketing tools, the company assists them in attracting and retaining customers to grow their businesses. They are also provided with reliable and convenient last-mile delivery services.
Hyperpure, the company’s one-stop procurement platform, supplies high-quality ingredients to restaurant partners. Additionally, it provides delivery partners with transparent and flexible earning opportunities.
As of March 2021, it was one of the top food services platforms in India in terms of value of food sold. In India, there were 32.1 million active monthly users (MAU) in FY21.
As of March 2021, the company had active listings in 525 Indian cities.
Since FY19-FY21, it has been the most downloaded food and drink application in India on both iOS and Google Play, as per App Annie’s estimates.
7) Competitive Advantages & Strategies
The competitive strength of the Zomato IPO
a) Its content and transaction flywheels drive strong network effects. Combined with the offerings of platforms such as Yelp, DoorDash, and OpenTable, it is the most unique food services platform globally, according to RedSeer.
b) It has a widespread and efficient on-demand hyperlocal delivery network.
c) A technology-first company leveraging artificial intelligence, machine learning, and deep data science to continuously innovate on the platform for its customers, delivery partners, and restaurant partners.
d) Zomato has a strong brand recognized across the length and breadth of India.
Growth strategy of the Zomato IPO
a) It wants continuous focus on unit economics and growth, at the same time.
B) Expanding and strengthening community relations across three brands – food delivery, dining out, and Hyperpure.
c) It will invest in new products, technologies, and features to satisfy its customers’ needs.
d) It will continue to invest in building a strong consumer brand in India.
In the financial year ended March 2020, the company’s consolidated loss widened from Rs 1,010.2 crore to Rs 2,385.6 crore. However, revenue nearly doubled from Rs 1,312.58 crore to Rs 2,604.7 crore.
Loss for fiscal year FY21 was Rs 816.43 crore on revenue of Rs 1,993.78 crore. The decline in revenue primarily caused by Covid-19.
In India, the company has no comparable listed entity.
9) Promoters and managers
The ‘promoter group’ at Zomato not made up of any members. Managed by professionals. The company has 74 shareholders as of July 6.
Pure play internet company Info Edge (India) is the largest shareholder in Zomato with an 18.68 percent pre-offer equity stake, followed by Uber B V (9.19 percent stake), Alipay Singapore Holding (8.39 percent), Antfin Singapore Holding (8.26 percent), Internet Fund VI Pte Ltd (6.04 percent), SCI Growth Investments II (6.03 percent), and Deepinder Goyal (5.55 percent).
The company is led by Kaushik Dutta, an Independent Director. Having over 25 years of experience, he is a fellow member of the Institute of Chartered Accountants of India. The think tank he co-founded specializes in corporate governance, public policy, and sustainability. He was also a Partner at Price Waterhouse & Co., Chartered Accountants LLP, and Lovelock & Lewes, Chartered Accountants.
Deepinder Goyal is the company’s Founder, Managing Director, and Chief Executive Officer. From the Indian Institute of Technology, Delhi, he holds an integrated master’s degree in mathematics and computing. He worked for Bain and Company before founding Zomato.
Sanjeev Bikhchandani and Douglas Lehman Feagin
A non executive director of the company is Sanjeev Bikhchandani, and another is Douglas Lehman Feagin. Namita Gupta, Aparna Popat Ved, Gunjan Tilak Raj Soni, and Sutapa Banerjee serve on the board of directors as Independent Directors.
Gunjan Patidar is a co-founder of the company and serves as chief technology officer. He graduated from the Indian Institute of Technology, Delhi, with a Bachelor of Technology degree in textile engineering.
Akriti Chopra is currently the chief people officer at the company as well as co-founder. Her three-year association with PricewaterhouseCoopers group was through Lovelock & Lewes, Chartered Accountants, its network firm at the time.
Gaurav Gupta is the company’s co-founder and head of supply. An Indian Institute of Technology, Delhi, bachelor’s degree in technology in chemical engineering as well as an MA post-graduate diploma in computer-aided management from the Indian Institute of Management, Calcutta. Before joining the company, he worked with A.T. Kearney Limited for over 10 years.
The company’s Chief Financial Officer is Akshant Goyal. The University of Delhi also awarded him a bachelor’s in computer science, and the Indian Institute of Management, Bangalore, awarded him a post-graduate diploma in management. While at Kotak Mahindra Securities, he worked at a startup and Kotak Mahindra Capital.
Rashul Ganjoo leads the company’s food delivery service. In addition to a bachelor’s degree from University of Pune in computer science, he holds a master’s degree in software engineering from Birla Institute of Technology & Science in Pilani, Rajasthan. Before starting with Snapdeal, he also spent 16 years working in various capacities at Wipro, ThoughtWorks, Symantec, SAY Media (formerly SixApart), and Jasper Infotech Private Limited (Snapdeal).
He is currently the head of new businesses at the company and is the company’s co-founder. Sardar Patel University in Gujarat awarded him a Bachelor of Engineering in Mechanical. Also, he holds a postgraduate diploma from the Indian Institute of Management in Calcutta. Previously, he worked for Pepsi Foods and MakeMyTrip (India) for over 19 years.
10) Allocations, refunds, listing dates
Around July 22, the company will finalize its IPO share allotment. Additionally, the ASBA account will unblocked upon completion of the refund process.
Moreover, equities issued to eligible investors will begin appearing on bourses on July 27. Equities issued to other investors will credited to their Demat accounts around July 26.
Credit Suisse Securities (India), Morgan Stanley India, and Kotak Mahindra Capital Company have been appointed global coordinators and lead managers on the deal. Also, the books running lead managers are Citigroup Global Markets India and BofA Securities India.
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