Zomato IPO This Week: LIC Plans to Invest in Rs 9,375 Crore IPO, Says Report

Zomato, with its initial public offering (IPO) coming up in a few days, has all eyes on it. Many parties have taken an interest in this food-delivery giant’s public issue. The latest to show interest in this historical IPO is the state-owned Life Insurance Corporation (LIC). LIC is looking to weigh in on a bid for Zomato’s share of the IPO this week, as per a report by Mint. This is being considered a ‘rare move’ as LIC typically only invests in the secondary market. The only exception the company makes is if that public issue is part of the government’s divestment programme.

The food-delivery giant will be opening its IPO with a valuation of Rs 9,375 crore, which is set to open this week on July 14. The bidding is set to continue till July 16. The IPO can be broken down into a fresh issue of Rs 9,000 crore and an Offer for Sale (OFS) worth Rs 375 crore by its shareholder, Info Edge. The public issue has a fixed price band of Rs 72 to 76 per equity share.

Zomato’s valuation has jumped to over $8 billion since January. The previous valuation for the company stood at $5.4 billion. This change is largely attributed to the surge in food delivery demand as a result of the pandemic and ensuing lockdown as per the report. The food ordering platform will be the first of its kind, i.e., from the group of internet unicorns, to go to its IPO.

LIC’s investments committee is set to hold a meeting soon. This is to make the final decision on the plan to invest in the upcoming Zomato IPO, sources at the Mint reported.

Zomato’s IPO Background

This IPO is one of the largest and most significant, as Zomato will be the first of its peers to open its public issue. Investors will be able to subscribe for a minimum bid of 195 equity shares or in multiples. Retail investors can bid for 13 lots at the upper limit of the price band, which stands at Rs 76 per equity share. As it stands the retail investors’ quota is fixed at 10 per cent for retail, 75 per cent for QIB and 15 per cent for NII. The IPO will even have an allotment for employees as well. There is a quota of 65 lakh equity shares for all eligible employees. The minimum lot size of 195 shares is valued at Rs 14,820. The maximum bid remains at 2535 shares with Rs 192,660 according to information on IPO Watch. In FY20 the company grew by 105 per cent, as opposed to FY19 where it only grew 47 per cent.

One of Zomato’s main shareholders is Info Edge, which holds an 18.55 per cent share. Uber BV is another such shareholder with a 9.13 per cent share. Alipay Singapore Holding Pte Ltd and Tiger Global have an 8.33 per cent share and 6 per cent share in the company respectively. Other shareholders include Sequoia Capital Temasek Holdings and the co-founder of Zomato, Deepinder Goyal. The shares for these parties stand at 5.98 per cent, 3.65 per cent and 5.51 per cent respectively.

The valuation of the company at IPO is supposedly equivalent to the market value of all the quick service restaurants. It even exceeds the listed hospitality chains in the country according to a report by the Times of India.

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