Zomato gets approval from SEBI for its $1.2-bn IPO; eyes valuation of $8 bn

BENGALURU: The Securities and Exchange Board of India(SEBI) has given formal approval to food delivery firm Zomato for its Rs 7,875-crore ($1.1-billion) Initial Public Offering, clearing decks for one of the most awaited public issues in Indian markets this year.

This comprises a fresh issue of shares worth Rs 7,500 crore and Rs 375 crore through an offer for sale by existing investor InfoEdge. Zomato, according to sources, is eyeing the IPO at a $ 8.7 billion valuation, a significant jump from its $5.4 billion valuations when it raised $250 million last month led by Tiger Global, Fidelty, Kora Management.

The SEBI has issued some observations to the Zomato in response to the draft red herring prospectus (DRHP) filed by the Gurgaon-based firm on April 28. Under the current guidelines, an IPO/ rights issue needs to be opened within 12 months from the date of issuance of SEBI observations. Zomato will have to now approach the Registrar of Companies for final approval. On Sunday, Zomato’s biggest investor InfoEdge informed the stock exchanges that it is reducing the size of its offer for sale in the upcoming IPO to Rs 375 crore from the earlier proposed Rs 750 crore .

Meanwhile, the National Restaurant Association of India (NRAI) on Monday approached the Competition Commission of India(CCI) alleging anti-competitive practices by food aggregators like Zomato and Swiggy, which has impacted the businesses of restaurants. The NRAI said that despite raising concerns with food delivery firms, no steps have been taken by the latter.

The association alleged that both Zomato and Swiggy have indulged in bundling of services, data masking, charging high commission, deep discounting, selective listing of hotels, in violation of competition laws. Zomato had said in its DRHP that Covid had significantly impacted the company revenues during the first quarter of FY2, and its dining-out business continued to be affected with the imposition or restrictions.