Food delivery company Zomato and its investors are planning for a listing in India. If plans go accordingly it will become India’s first internet IPO since IndiaMart Intermesh in 2019.
Zomato Corp. is making plans to appoint merchant banks and law firms. It wants to become the first modern consumer internet IPO. Search engine companies like Just Dial and Info Edge are two other examples of internet IPOs on the domestic bourses. Online travel company MakeMyTrip also has been listed overseas on the Nasdaq in 2010.
A person cited above Moneycontrol stated that “Zomato has picked Kotak Mahindra Capital as the left lead merchant bank for the proposed IPO in 2021”. Additional merchant banks, both domestic and international, are likely to be added later. Law firms Cyril Amarchand Mangaldas and Indus Law are appointed as legal advisors of Zomato.
The left lead merchant bank has a crucial responsibility in the documentation of an IPO and leads the interaction with the market regulator.
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Travancore Devaswom Board is going to appoint ST.priest in Kerala Zomato’s listing. Other Indian internet giant companies such as Flipkart, Paytm, and BigBasket too are considering listings during the next few years.
We first reported that Zomato was looking to clinch big-ticket investments from the likes of Tiger Global and Temasek ahead of a targeted IPO next year. According to the reports the firm was looking to reduce its cash burn and get closer to profits.
India’s leading restaurant food delivery firm is backed by canopy investors such as Info Edge, Temasek, Ant Financial, and Tiger Global.
A person also stated that “After serious discussion, Zomato has opted for a domestic IPO as compared to an overseas listing and its investors are also pleased with an India IPO”.
Overseas listings sway in terms of a diverse pool of investors and better benchmarking of business models. But they can also call for higher liabilities and compliance costs.
The government gave green signals for a direct overseas listing of Indian firms in permissible jurisdictions in May 2020. The fine print of the norms will be out soon.
Many bankers think that one can get the same valuations in India as several Asian and Indian investors are keen to diversify from financial and consumer companies to technology and internet firms just like Indiamart Intermesh. In July 2019 the B2B online platform released its IPO with an issue price of Rs 973.