InfoEdge Still Betting Big On Zomato Even After Overwhelming Response To IPO

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After the success of Zomato’s IPO, the founder and vice chairman of InfoEdge, Sanjeev Bikchandani said that Zomato sees ‘tremendous potential’ and he is still betting on the latter. He also revealed that he is not going to sell his stake from Zomato.

InfoEdge, the multinational internet investment company that runs many popular internet platforms like 99Acres.com, Jeevansathi.com, and the job portal Naukari.com, was the first investor of Zomato, back when the latter was still taking baby steps.

The company stuck to Zomato through thick and thin and still shows trust in the Indian food delivery startup unicorn. InfoEdge is the largest shareholder in Zomato with 18.55% stocks. 

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The Success of Zomato’s IPO

After months of hinting, Zomato’s IPO finally opened on 14th July and closed on 16th July 2021. On the first day of the issue opening itself, its IPO was subscribed 105%. By the end of 16th July, it was oversubscribed by a jaw-dropping 40x.

On July 23rd, Zomato debuted on the stock market with a listing premium of more than 50% than offered IPO price. On the Bombay Stock Exchange, the listing price was at Rs 115, a hike of 51.32%. While on the NSE the stock opened at Rs 116, 52.63% higher than the final offer price of Rs 76. At a point the intraday trading hit a high of Rs 138, pushing its market-capitalisation to greater than Rs 100,000-crore, breaching that of prominent Nifty50 names like IOC and Tata Motors.

The Big Picture: InfoEdge’s founder on Zomato

The ROI from Zomato is no less than a fairytale for InfoEdge.

The Story of InfoEdge and Zomato goes back to a decade ago. Sanjeev Bikchandani and Hitesh Oberoi, MD and CEO of Info Edge used to use Zomato’s website to order food, and they loved it. Bikchandani revealed that it was the latter’s suggestion to invest in Zomato. When the duo met Deepinder Goyal, the CEO of Zomato, they hit off instantly and thus formed a superteam.

Later, in 2010 Bhikchandani wrote the first cheque for Zomato of Rs 4.7 crore. In fact, InfoEdge was the only investor of the unicorn for the first 4 rounds of funding! The ROI of the first cheque that InfoEdge’s wrote for the food delivery app has zoomed to 1050 times.

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Despite selling a sizeable portion (2.32%) of its share during OFS, Bikchndani led InfoEdge is still the largest shareholder in Zomato with around 15.23% stake. Bikchandani is not ready to sell out his shares even after astronomical profits because he sees great growth potential in the company. He even hinted at a lifelong bond.

The visionary CEO of InfoEdge complimented the resilient management and the CEO of Zomato for staying put in the market despite competitors and the Covid pandemic. He said it was because of the latter that InfoEdge has received an internal rate of return (IRR) of around 60%, in eleven years, from the food delivery unicorn. He said that great management from Zomato’s team made the former look like a smart investor.

The total investment InfoEdge made in Zomato – untill IPO – is Rs 31 crore which led it to own 18.55% share of the food delivery unicorn. During the IPO, InfoEdge sold 3.32% of its holding at a price of Rs 76 to mint Rs 374.99 crore. After the listing of Zomato, the 15.23% stock value of Zomato amounts Rs 2263.90 crore (Rs 116 listing price).

Bhikchandani thinks that opening an IPO abroad, especially out of pressure from the investors isn’t a great idea. He further revealed that he regrets not investing in some startups like Flipkart, Ola, Snapdeal, amongst a long list, and that he did not shun the possibility of Zomato, dipping its toes into groceries. He said that the possibilities are still tremendous.

Food for Thought

Zomato’s IPO has given other startups hope. It can be a trendsetter and an example to other companies, aspiring to open an  IPO in the future, demonstrating that it is not necessary to open an IPO abroad for success. Success can be achieved where the company’s market lies, in the domestic market itself. 

Encouraged by the response received by Zomato, many startup unicorns have started gearing up for their IPO in the next few months. Paytm IPO has already started turning heads. It would be interesting to see how many of those would be able to replicate the success of Zomato IPO.

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