Zomato to raise up to $1 billion, no existing investors likely to offload stake

According to news reports, Zomato is likely to raise between $750 million to $1 billion through its proposed initial public offering (IPO). However, the best thing about Zomato IPO is that none of the existing investors are likely to exit or part sell their stake through the issue, the sources mentioned above told the publication.

Zomato co-founder Deepinder Goyal earlier this week told company employees in a town hall that its IPO will most probably be a 100% primary issue, keeping in mind the long-term upshot the investors expect from the stock. This means the company will end up raising more capital, rather than the shareholders selling stake to public market investors, Goyal said.

Worth mentioning here is that the development holds significance as it will create a huge war chest for Zomato as it shores up growth in its fight with a well-capitalised competitor like Swiggy which too is raising around $800 million in fresh funds. According to an earlier report in the business daily, the Bengaluru-based company is in advanced negotiations to close a $700-800 million funding round led by sovereign wealth funds Qatar Investment Authority with participation from GIC of Singapore as well as global alternative asset manager Falcon Edge.

Zomato's proposed IPO may come in June at a valuation of $6-8 billion. Expectations from Zomato IPO are high especially after the successful IPO of SoftBank-backed Door-Dash in December, when the US-based food-delivery startup opened trading at $182, about 78% higher than its IPO price, on the New York Stock Exchange.