MUMBAI -- Indian food delivery startup Zomato is offering to sell shares worth 82.5 billion rupees ($1.1 billion) in a long-awaited initial public offering by one of the country's best-known tech "unicorns."
Zomato's domestic IPO plan will be closely watched by market participants and industry alike at a time when Indian startups have attracted a wave of fundraising interest. The plan comes as India grapples with a vicious second wave of the COVID-19 pandemic, plunging the country into crisis.
According to a draft "red herring" prospectus filed with the Securities and Exchange Board of India on Wednesday, Zomato -- whose backers include China's Ant Group -- intends to sell fresh shares worth 75 billion rupees in the primary market. Its largest shareholder Info Edge will offer 7.5 billion rupees worth of its shares.
Zomato may also make a pre-IPO placement for up to 15 billion rupees. Listing dates and prices will be announced after the securities board reviews the prospectus.
Zomato said it plans to use 56.25 billion rupees of the IPO proceeds to fund growth.
"We need to continue to invest in three core areas for the growth of our business which include a) customer and user acquisition, b) delivery infrastructure, and c) technology infrastructure," it said in the document.
India's tech scene has grown apace. In 2020 alone, 11 unicorns were created, taking the total number of startups valued at $1 billion or more to around 35 or 40.
Only a handful of tech startups have so far filed an intention to list. But the likes of fintech company Mobikwik, insurance aggregator Policy Bazaar and Delhivery are widely thought to be planning to hit the market soon.
In the last couple of months, Zomato raised $250 million at a valuation of $5.4 billion from investors such as Tiger Global, Kora Management, Fidelity, Dragoneer and Bow Wave. This followed a $660 million round from new investors including Luxor Capital, Baillie Gifford & Co. and Mirae Asset.
As of the date of the filing of the prospectus, Info Edge held an 18.55% stake in Zomato and Uber BV controlled 9.13%. Alipay Singapore Holding and Antfin Singapore Holding -- Ant Group's affiliates -- held 8.33% and 8.2%, respectively.
Shares in Info Edge were trading higher by around 2% at 5,020.15 rupees on the Bombay Stock Exchange's afternoon session, while the BSE benchmark Sensex was up 1.4% at 49,629.82.
Founded in 2008 as menu aggregator DC Foodiebay Online Services in Delhi, by Deepinder Goyal and Pankaj Chaddah, Zomato is present in 24 countries and over 10,000 cities.
According to a note by Bernstein, Zomato and its rival Swiggy each control around 50% of India's food services market.
"India food services market is large and expected to reach $74 billion by the financial year 2024. Organized food service is growing faster and projected to be 52% of the overall market. We expect online penetration to expand to 16% and online food delivery market to reach $ 12 billion by financial year 2024 growing at 43% CAGR," it said.
Zomato has around 11 million active users in India ordering 3.6 times a month. "We expect users to reach 30 million by 2025," the note said.