Indian food delivery service Zomato files for a $1.11bn IPO

By Ashika Rajan, Trainee Reporter
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Zomato, an online food delivery, and restaurant discovery platform filed its much-anticipated draught red herring prospectus (DRHP) with markets regulator, the Securities and Exchange Board of India (SEBI), becoming India’s first major domestic consumer internet startup to go public.

Zomato stated in its filing that it plans to raise $1.11 billion in capital by offering the company’s equity shares, with $1.0 billion coming from new issuance. The remaining $0.10 billion will be offered for sale by existing shareholder Info Edge, Zomato’s earliest backer.

The parent of Naukri.com revealed its decision to sell its shares in Zomato’s upcoming public offering (IPO) in a stock exchange filing on the last day.

According to financials shared in the IPO prospectus, Zomato earned $1.83 billion in revenue from April 1 to December 31, 2020, while making a loss of $0.92 billion during the same period.

The company’s revenues were $3.6 billion in the fiscal year ended March 31, 2020, while losses were $3.17 billion, indicating that despite a significant drop in revenues in the first nine months of Fiscal Year 21, the company was able to cut losses thereafter.

Zomato stated that “as lockdowns in response to the COVID-19 pandemic eased in India towards the end of May 2020, our food delivery business started recovering and in the third quarter of fiscal 2021 we recorded the highest GOV achieved by us in any quarter till December 2020,”

Zomato expects to continue with the losses, “we expect our costs to increase over time and our losses will continue given significant investments expected towards growing our business.”

Zomato’s IPO is expected to raise between $750 million and $1 billion. Zomato added five new independent members to its board of directors in the run-up to the IPO.

According to the reports, Info Edge owns about 18.5 percent of the company, worth $9.7 billion.

Swiggy, Zomato’s main competitor, is finalizing a $450 million funding round from the UK-based SoftBank Vision Fund, valuing the firm at $5 billion.

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