Zomato IPO: Gateway To A $50 Billion Valuation In The Next 5 Years?

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Looks like Zomato IPO would be the talk of the town for months to come.

With the online food delivery business slowly starting to resemble the pre-pandemic heydays, Zomato is looking to take it an even higher notch.

In a bold new development from the food delivery giant, Zomato is reportedly poised to follow through on its long-planned initial public offering (IPO)!

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The food delivery start-up, which would be among the first Indian tech start-ups to go public in 2021, is aiming to raise anywhere close to $750 million to $1 billion through the IPO, without having investor exits or any share sales.

Deepinder Goyal, Zomato co-founder and CEO, has also shared his enthusiasm about the soon-to-launch Zomato IPO. According to certain sources, Goyal has asserted that the IPO would most likely be a 100% primary offering. With the company raising more capital from the move, investors would surely look to keep long-term slingshot in mind before selling shares.

With the assertion, Goyal has also quietly lit hopes of Zomato hitting the $50 billion valuation mark in the next five years!

As per reports doing the rounds, the decision of not selling shares at the IPO by Zomato’s roster of existing investors, such as Tiger Global, Temasek Holdings, Sequoia Capital, and Info Edge (India), and other investors, would not see them reaping returns from the get-go.

For Zomato, the pre-IPO build-up to the announcement has been quite satisfying. The company, which started off as a restaurant discovery and review platform, was successful in closing out a $250 million primary funding round, with another $250 million of shares being sold by existing investors like China’s Ant Financial, among others.

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The pre-IPO round ensured that the Gurugram-based firm stood at a value of $5.4 billion, markedly higher than its previously held $3.9 billion valuations in December 2020 when the unicorn had closed a $660 million fundraising.           

Following the present developments, it is expected that Zomato will launch its IPO somewhere around June this year, with a valuation in the range of $6-$8 billion.

The upward curve which the IPO augurs is at stark ends to the time when the pandemic wreaked havoc on businesses in India.

Market dominators Zomato and rival Swiggy both struggled. Zomato has to take some hard decisions of recalling operations from certain cities, in addition to laying off staff. However, in the period especially post the New Year, the food delivery business has shown some encouraging signs of a rejig.

Just as well, because its competitor Swiggy is also on the prowl and in advanced talks for raising close to $800 million war chest in a funding round to be led by sovereign wealth funds like Qatar Investment Authority, also GIC of Singapore as well as global alternative asset manager Falcon Edge.

The bigger picture from the announcement is also one where the food-delivery app is the first among a growing flock of Indian tech start-ups eyeing a listing this year. As of the week gone February 22-27, a staggering $440 million was invested in Indian startups across 19 deals overall.

For Zomato’s vantage, the reason for investors to be all the more pumped about the finality of going public is seeing a successful precedent IPO of US-based food-delivery start-up DoorDash. The company was listed at $182, 78% higher than its IPO price on New York Stock Exchange. DoorDash raised around $3.4 billion in the initial share sale. Its current valuation sits at $53.6 billion, which is what Zomato will also be aiming to get eventually.

With Zomato ending the New Year on a high, this announcement looks to usher in some exciting new times for the company ahead. At this pace, cracking the $50 billion valuation mark will come in good time.

 Till then, stay tuned for more updates.

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