Rs 24,000 Crore Worth Zomato Aims For Mega IPO; Claims Rs 1800 Cr Cash In Bank
As part of its fundraising round, Zomato has raised $160 million (about Rs 1,173 crore) in funding from Tiger Global and Temasek Holdings subsidiary MacRitchie Investments, valuing the online food ordering platform at $3.3 billion, according to Info Edge India Ltd. on Thursday.
Zomato Initial Public Offering
During a regulatory filing, Info Edge said, “Zomato Co. has closed a primary fundraise of $100 million from Tiger Global Management, LLC (through its investment vehicle Internet Fund VI Pte Ltd and/or any of its affiliates), and $60 million from MacRitchie Investments Pte Ltd, an indirect wholly-owned subsidiary of Temasek Holdings and/or any of its affiliates,”.
With the latest move, on a fully converted and diluted basis, Info Edge’s effective stake in Zomato stands at 22.2%, as per the filing.
Further, the online food ordering firm is also gearing up to go public by mid-2021 and seems to mark a turning point for Indian unicorns even as they wait to turn profitable.
On Thursday, Zomato founder and CEO, Deepinder Goyal informed employees about the initial public offering (IPO).
Same day Info Edge informed the exchanges that Zomato has raised $103 million from New York-based Tiger Global Management as a part of its ongoing Series J financing.
Utilization Of The Fund
Regarding the utilization of funds, Goyal said to the employees that their company has around $250 million in the bank, which is going to be utilized for potential mergers, acquisitions and also in fighting price competition in the market.
Further Mr. Goyal said, “Our finance and legal teams are working hard to take us to IPO sometime in the first half of next year. The value of our business is going up dramatically, all thanks to the hard work and commitment of our team,”.
According to Mr. Goyal, Zomato’s burn rate had been reducing even as its market share was accelerating in all regions.
For July, the monthly burn rate stands at under $1 million, he added.
If we talk about finances, Zomato has doubled its revenue to $394 million in 2019-20.
But, the losses also marginally increased to $293 million from $277 million in 2018-19.
What Does The Analyst Say?
Despite the uncertainty in the current market, analysts said that these losses wouldn’t impact Zomato’s IPO aspirations.
The managing partner, D and P Advisory Services LLP, a management consultant, Santosh N. said that “companies such as Facebook and Amazon were loss-making at the time they went public. So losses might not hold back Indian tech unicorns from an IPO. If a company isn’t profit-making, it will have to go through a book-building process where a stock price is decided within a range based on bids received,”.
“Zomato going public will generate bullish sentiment among late-stage investors who have invested in Indian unicorns, startups which have only seen investors exit through lateral stake-sale to other venture capitalists” Santosh added.