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Zomato IPO oversubscribed by 38x on the last day of bidding

On the third day and on the last day of bidding, Zomato’s Rs 9,375-crore initial public offering (IPO) was oversubscribed 38.26 times, as per the provisional subscription data revealed. Investors have flocked to the Gurugram based food-tech unicorn’s blockbuster public offering, with Qualified Institutional Buyers (QIB), Non-institutional Investors (NII), and Retail investors all exceeding their thresholds.

The company’s IPO is the very first contribution by a homegrown tech unicorn on the country’s stock exchanges. The IPO is the biggest on Dalal Street after SBI Cards and Payment Services went public in March 2020, right before the market crashed due to the Covid outbreak.

Zomato logo on a smartphone

Image Source: Getty Images

According to data from the National Stock Exchange (NSE), the Rs 9,375 crore worth of Zomato IPO attracted 2,751.27 crore bids for a total issue size of 71.92 crores of its equity shares. The Qualified Institutional Buyers (QIBs) portion of the food-tech IPO was the fastest oversubscribed, at 51.79 times the offering amount. Foreign Institutional Investors (FIIs) topped the QIB portion, which was followed by banks, financial institutions, and mutual fund organizations. In contrast, the 10% portion of the total IPO offering for retail individual investors (RII) was oversubscribed by 7.45 times.

Loss-making firms have to limit their retail investors’ quota to 10% while going public, according to new SEBI guidelines. Approximately 75% of the Zomato IPO allotment is reserved for QIB (including anchor investors), with the remaining 15% reserved for non-institutional investors (NIIs). Individual investors (besides retail investors) were the most active members of the NII, followed by corporate investors.

On the final day of bidding, the NII base was subscribed 32.96 times. Investors who normally buy shares of more than Rs 2 Lakhs are denoted as among the NII base. Individual investors and financial institutions who subscribe below this limit are considered retail investors by definition.

Employees of Zomato subscribed to the public issue at a rate of only 0.62 times. This portion of the offering wasn’t only oversubscribed. The total amount of shares reserved for employees, according to the prospectus released last week, was worth Rs 500 crore.

On July 13, a day before the IPO commenced, Zomato announced that the company had already raised Rs 4,196.51 crore through 186 anchor investors. The IPO’s size was already significantly decreased from Rs 9,375 crore to Rs 5,178.49 crore. Several high-profile investors were allotted more than 2% of the company’s stakes. Morgan Stanley Investment Fund, Tiger Global Investment Fund, Baillie Gifford Pacific Fund, Fidelity Fund, New World Fund, Canada Pension Plan Investment Fund, Government of Singapore, and Kotak Flexi Cap Fund participated in the pre-IPO funding round.

Zomato’s post-IPO market valuation will exceed that of five publicly traded fast food and restaurant corporations in India. This includes Jubilant FoodWorks (India’s primary franchisee for Domino’s Pizza), Burger King India, fast food restaurant holding company Westlife Development Ltd, Barbeque-Nation Hospitality, and Speciality Restaurants.

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