Zomato, an Indian food delivery service, has launched an initial public offering (IPO) worth $1.3 billion.
Zomato, the food delivery service, launched its much-anticipated initial public offering (IPO) on Wednesday, raising 93.75 billion rupees ($1.3 billion), the largest IPO in India this year and the first in a succession of tech unicorn IPOs.
Zomato, which has Uber and Jack Ma’s Ant Group as backers, is one of India’s hottest tech start-ups and, together with rival Swiggy, dominates the country’s expanding app-based food-delivery industry.
The initial public offering, which ends on Friday, saw new shares valued between 72 and 76 rupees offered.
Zomato received about 41.96 billion rupees ($560 million) from 186 major institutional investors ahead of its initial public offering, including Blackrock, Fidelity, JPMorgan, and Morgan Stanley.
So far, 10% of shares designated for retail investors have been subscribed more than twice as of 2.00pm local time (0830 GMT).
However, interest in the remaining shares assigned to institutional and high-value investors was lukewarm in the early hours of bidding.
Institutional investors have roughly 75% of the IPO reserved for them in total.
The food delivery business in India, which has a population of 1.3 billion people, is expected to grow rapidly, and Zomato and Swiggy delivery riders are common in Indian cities.
However, there are fears that companies such as Zomato and Swiggy, which have yet to break even due to significant start-up and marketing costs, may be overvalued.
Zomato, which has 525 locations in India and more than 32 million monthly visitors, lost 8.16 billion rupees in the fiscal year that ended in March 2021.
In a statement to customers ahead of the IPO, Mumbai-based investment services firm Motilal Oswal warned, “Zomato has been incurring large losses and may continue to suffer losses in the near future, considering the business is at fledgling stage.”
Around 30 Indian companies have declared ambitions to go public this year, including Paytm, a digital payments company backed by SoftBank and Ma.
The IPOs of Zomato and Paytm are likely to catapult India’s IPO market to its strongest year ever.