Zomato is raising $1.3 billion in India’s biggest tech IPO

By Diksha Madhok, CNN Business

India’s biggest tech IPO is here.

Food delivery startup Zomato is looking to raise almost $1.3 billion this week in an initial public offering in Mumbai, the company said in a recent regulatory filing. That would set a new record for the biggest technology offering in India, according to data from Refinitiv, beating Tata Consultancy Services’ $1.17 billion IPO in 2004.

Zomato plans to sell shares priced between 72 and 76 rupees (97 cents to $1.02) per share and close its books on Friday. At the upper end of the price range, Zomato would be valued at almost $8 billion.

Its founder Deepinder Goyal began Wednesday with a nervous tweet: “Just ordered a triple breakfast @zomato. Stress eating.”

Investors are closely watching the offering, which will give some insight into the market’s appetite for Indian startups. The country has a ton of tech unicorns — companies that have reached a valuation of at least $1 billion — but none of them have ever gone public before.

Analysts have expressed concern that Indian startups — many of which have raised hundreds of millions of dollars from private markets at extremely high valuations — need to start showing consistent profits and healthy exits for investors.

“This IPO is in some sense the beginning of the Indian digital ecosystem’s promises starting to get fulfilled,” Ashish Fafadia, partner at the Indian venture capital firm Blume Ventures, told CNN Business.

He said investors will be looking at how the company performs after it lists, along with how well Zomato is able to hit quarterly targets.

“The ultimate long-term test would be if they are able to become a profitable business,” he added.

Paving the way

Zomato was founded in New Delhi in 2008 by Goyal. The company has built a name for itself as one of India’s most successful startups, with a team of more than 5,000 employees and a reach across more than 10,000 cities in two dozen countries, from Sri Lanka and Slovakia to South Africa.

The firm made waves in January 2020 when it bought Uber Eats in India, handing Zomato a big win in its home market. California-based Uber picked up a nearly 10% stake in Zomato as part of the deal.

Zomato’s public offering this month could also pave the way for more Indian unicorns to go public down the road.

Walmart-owned Flipkart, which is the only Indian tech unicorn to have been acquired at a valuation of more than $1 billion, is considering a public offering, according to media reports.

That e-commerce firm raised $3.6 billion in its latest round of funding from investors including GIC, the Canada Pension Plan Investment Board, SoftBank’s Vision Fund 2 and Walmart, the company said this week. Flipkart is now valued at nearly $38 billion.

Zomato’s IPO will also serve as another test for the closely watched global food delivery industry. Deliveroo’s IPO crashed in London earlier this year despite great fanfare, becoming the city’s worst debut on record.

— Michelle Toh contributed to this report.

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