In the run-up to its public offering, the Gurgaon-based company is also in the process of closing a $30-million share sale for its former employees, which will be one of the most significant ESOP liquidity events in India. Zomato is in the process of raising its pre-IPO round of $600 million, as a part of which it raised $100 million from Tiger Global. Before that, it raised close to $150 million from Singapore’s Temasek, China’s Ant Financial and UK-based Baillie Gifford. The company’s valuation is expected to cross $3.5 billion with the new round, if it closes.
“Our finance/legal teams are working hard to take us to IPO some time in the first half of next year. The value of our business is going up dramatically, all thanks to the hard work and commitment of our team,” said Goyal in a mail to company employees.
While the initial start of the lockdown in March-April due to Covid-19 hit revenues of Zomato and rival Swiggy hard, the company said last month food delivery has recovered 75-80% of its pre-pandemic sales, while dining in at restaurants is still at just 8-10%. But at the same time, it has cut monthly losses from $45 million in March 2019 and $20 million in October 2019, which came down to $1.5 million in June this year.
The company said it does not have any immediate plan for the cash it has raised.
“We are treating this cash as a ‘war-chest’ for future M&A, and fighting off any mischief or price wars from our competition in various areas of our business,” Goyal told employees in the mail. In the past, Zomato and Prosus Ventures-backed Swiggy have held discussions for a merger, but talks have not progressed.
Several Indian internet companies like classifieds owner Info Edge, which also owns a 25% stake in Zomato, besides online travel portal MakeMyTrip and business-to-business commerce portal IndiaMart — none of the highly valued unicorns — have till now gone for a listing. In July, online financial services portal PolicyBazaar had reportedly said it plans an IPO by September 2021. Before the pandemic, companies like ride-hailing giant Ola and e-commerce major Flipkart had talked about an IPO by 2021 and 2022, though the status of those plans is not clear.
“The pandemic has helped companies with resilient business models break out even more rapidly. While many companies took a short-term hit, some have bounced back fast and with improved economics. Zomato has been sharing its annual financial report in spite of being a privately held company through both ups and downs — their culture of transparency is truly commendable,” said Tarun Davda, MD at venture capital firm Matrix Partners India, which has backed companies like Ola, Dailyhunt, Razorpay and Five Star Finance.