Size of the public offer: Through the initial public offer, Zomato intends to raise Rs 8,250 crore, out of which, around Rs 7,500 crore will be through a fresh issue of the equity shares. Info Edge, the top shareholder, and the company's earliest backer will sell shares worth Rs 750 crore through an offer for sale or OFS.
Price Band, Date of IPO: Zomato has not yet fixed the price band and lot sizes in which interested investors can bid for shares in the IPO. The date for the initial public offer was also not announced by the company in the draft red herring prospectus. (Also Read: Zomato Files For $1.11 Billion IPO As Food Delivery Surges In Pandemic Times
Objectives of the IPO: According to the draft red herring prospectus, Zomato said that it intends to utilise the proceeds for funding the organic and inorganic growth initiatives and for general corporate purposes. It added that the amount utilised for general corporate purposes will not exceed 25 per cent of the net proceeds. The organic growth initiative includes delivery infrastructure, technology infrastructure, and customer and user acquisition.
Pre-IPO Placement: Zomato may consider a private placement of equity shares amounting to Rs 1,500 crore before the filing of the red herring prospectus. In case the pre-IPO placement is undertaken, the minimum offer size will constitute at least 10 per cent of the post-offer paid-up equity share capital. (Also Read: Info Edge India Shares Rise After Zomato Files Papers For IPO )
Risks (Forward-Looking): Zomato stated that the COVID-19 pandemic, or a similar public health threat, could impact cash flows, business, and overall operations. Zomato also faces competition in the food delivery market. The company, along with domestic rival Swiggy, backed by Accel, dominates the food delivery market in the country, which research firm RedSeer estimates is worth $4.2 billion.
In February 2021, the food delivery startup raised $250 million from five investors including hedge fund Tiger Global Management for a post-money valuation of $5.4 billion.