Zomato IPO: Investors Pour In Rs 2.09 Lakh Cr Bid, 40 Times More Than Firm Aimed To Raise In Public Offering

China's Ant Group-backed firm capitalized on the growing investor interest from foreign funds, valuing the company about $8 billion.

(Representative Image/Getty)

New Delhi: Investors bid Rs 209,097 crore ($28 billion), or more than 40 times the amount the Indian food delivery startup Zomato wanted to raise in its Rs 9375 crore ($1.3 billion) initial public offering (IPO).

According to market data, the institutional portion of the IPO was almost 55 times oversubscribed, the high net worth individual part was nearly 35 times oversubscribed, and the retail portion was almost eight times oversubscribed.

China's Ant Group-backed firm capitalized on the growing investor interest from foreign funds, valuing the company about $8 billion. The company's IPO opened for subscription on July 14 and closed on July 16.

Before the IPO, 186 major financial investors, including Tiger Global, BlackRock, JPMorgan Chase, and Morgan Stanley, invested Rs 4190 crore ($562 million) in the company as anchor investors to capitalize on the growing popularity of internet-based consumer companies among investors as a result of the pandemic's acceleration of global adoption of digital technologies.

Even though Zomato stated in its offer document that its costs and losses would continue to rise as it increased investments in business growth, the IPO, the first in India's food delivery space, received a massive response from investors.

Zomato has collaborated with 350,000 restaurants and cafes across 526 Indian cities. Customers can also reserve tables for in-person dining, write food reviews, and upload photos. It competes with Softbank-backed Swiggy, while Amazon's still-in-development food delivery service in a food delivery market that Boston Consulting Group predicts will double to $8 billion by 2023, up from $4 billion last year.

According to its offer document, the Zomato app has 41.5 million monthly users, and orders on its platform increased to 403.1 million in 2019-2020, up from 30.6 million in 2017-2018.

The Zomato IPO comes when India's markets are approaching all-time highs, and digital companies are increasingly interested in going public.
China's Ant Group and Japan's Softbank backed Paytm, India's digital payments leader is seeking regulatory approval to raise up to Rs 16600 crore ($2.23 billion), making it the country's largest stock market debut ever, exceeding Rs 15000 crore raised by state-owned Coal India a decade back.

About Rs 41,700 ($5.6 billion) has been raised through IPOs on Indian stock exchanges so far in 2021. Several Indian startups have announced plans to go public to capitalize on rising foreign investor interest. Among those planning IPOs are Walmart Inc-owned e-commerce giant Flipkart, beauty brand Nykaa, and ride-hailing service Ola.