SUMMARY
The company will raise $250 Mn through primary stake sale, and another $250 Mn via secondary stake sale
ANT Group and Sunlight Fund will get partial exit, amid geopolitical tension between India and China
The company is looking to raise the latest round at a $5.5 Bn valuation, and will seed $8 Bn valuation while going public
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After closing a $660 Mn round in 2020 with 10 new investors added to the cap table, food delivery platform Zomato is now on a lookout for an additional $500 Mn in a pre-IPO (initial public offering) funding round. The company will reportedly be valued at $5.5 Bn after the round, representing a 41% increase from its last valuation of $3.9 Mn.
The pre-IPO round will comprise a mix of primary cash infusion of $250 Mn from existing backers Tiger Global, Kora Investments, Steadview, Fidelity, Bow Wave and Vy Capital. San Francisco-based Dragoneer Group will also be investing in Zomato’s latest funding round.
Info Edge Will Be Zomato’s Largest Stakeholder
Besides the primary cash infusion, another $250 Mn would be raised through secondary sale of shares by Chinese investors ANT Group and Sunlight Fund, as per an ET report. The partial exit for the two investors comes amidst the heightened geopolitical tension between India and China, following the violent clash in Ladakh’s Galwan Valley last June.
ANT Group is currently the largest shareholder in Zomato with about 23% stake till the last round in 2020. After its partial exit, the lead investor position will be taken over by Info Edge which holds 17% stake in the food aggregator business.
Zomato is expected to have $1 Bn in cash as it further commences towards the public market. The company also reportedly appointed Goldman Sachs, Morgan Stanley, Credit Suisse and Kotak Mahindra Bank to run its IPO process, and is looking for a $6 Bn-$8 Bn valuation. It has also bought in Cyril Amarchand Mangaldas and Indus Law as legal advisors.
Indian Startups Get Serious About IPOs
If Zomato’s IPO goes per plan, then it will join MakeMyTrip that got listed in 2010, Info Edge India Ltd that was listed on BSE in 2006, IndiaMART, which got listed in 2019, and perhaps even Nazara Technologies, which is all set to go public this year. Nazara has filed its draft red herring prospectus (DRHP) relating to its initial public offering (IPO) with market regulator Securities and Exchange Board of India (SEBI) last week. It will become the first Indian gaming technology company to list publicly.
The likes of Flipkart, Paytm, OYO, Ola, PolicyBazaar, BigBasket and others have been talking about going public in a couple of years with hardly any concrete steps towards it. SoftBank Vision Fund head Rajeev Misra has previously said that PolicyBazaar, Delhivery and Grofers are making serious efforts to go public soon.
Last week, Grofers founder and CEO Albinder Dhindsa said as the company prepares for a public listing later this year, it is evaluating acquisitions of ecommerce-specific tech products that will help improve the efficiency of supply chains as well as customer experience in the areas of product discovery or recommendations and more.
Delhivery has also managed to cut its losses by INR 1,500 Cr ($205 Mn) in financial year 2020. The company’s expenses were cut 6% to INR 3,250.4 Cr ($445 Mn), while revenue increased by 74% to INR 2,986.4 Cr (INR 409 Cr).
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