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Zomato grey market premium shares traded at Rs. 15-20 higher than the expected IPO price

Zomato, India’s most valuable food delivery startup, is getting ready to launch its highly-anticipated initial public offering (IPO) in the Indian market. Securities and Exchange Board of India (SEBI), the market regulator, has granted the food-tech unicorn the green light to seek money through an IPO. In April, the company submitted a draft red herring prospectus (DRHP) to the market regulator, proposing an IPO of Rs 8,250 crore.

Zomato Logo on smartphone

Image Source: Growmudra

According to the reports, unlisted food-tech unicorn shares are trading on the unofficial markets in which such shares are traded at the cost of Rs. 15-20 higher than the expected IPO price. Ultra-wealthy investors commonly use the grey market premium to forecast the potential listing gain that an IPO might provide. Zomato’s shares are currently trading on the grey market for Rs 87 to Rs 92 per unit.

Following the Securities and Exchanges Board of India’s (SEBI) submission of its remarks on Zomato’s draught red herring prospectus (DRHP), the restaurant aggregator is expected to open for listing on stock exchanges a price band of Rs. 70 – Rs. 72 per share.

The current investor of the food delivery startup includes Info Edge (18.55 percent ), Uber BV (9.13 percent ), Alipay Singapore Holding Pte Ltd (8.33 percent ), Antfin Singapore Holding Pte Ltd (8.20 percent ), Tiger Global (6 percent ), Sequoia Capital (5.98 percent ), co-founder Deepinder Goyal (5.51 percent ), Temasek Holdings subsidiary (3.65 percent ), and a few more.

Grey market analysts predict that the company would raise more than Rs 9,300 crore in the primary market, with roughly Rs 1,500 crore coming from pre-IPO transactions. The largest shareholder in Zomato, Info Edge, plans to sell its stake worth Rs 700 crore through the public offering, whereas Zomato would raise the rest through new shares.

Dinesh Gupta, cofounder of UnlistedZone and a grey market analyst said pricing would increase in the days ahead since investment stock is trendy. Gupta added the IPO would be homegrown startups considering an IPO. He also remarked, “Zomato is among the top beneficiaries of Covid-19 related restrictions. We expect the company’s revenues to rise in the coming quarter.”

The global coordinators and book running lead managers for the issuance are Kotak Mahindra Capital Company, Morgan Stanley India Company Pvt Ltd, and Credit Suisse Securities (India) Pvt Ltd. The merchant bankers for the public offering, BofA Securities India Ltd and Citigroup Global Markets India Pvt Ltd, have been appointed. The unicorn startup will list its shares on the BSE and NSE exchanges.

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