Indian Twitter is abuzz with activity as online food delivery service provider Zomato’s initial public offering (IPO) worth ₹ 9,375 crore opened up for subscription. India’s biggest this year – will be available for subscription till Friday, July 16, 2021. The price band of Zomato IPO is fixed at Rs 72-76 per share of the face value of Rs 1 each and the company aims to raise Rs 9,375 crore through the offer.The IPO comprises a fresh issue of equity shares worth Rs 9,000 crore and an offer for sale (OFS) worth Rs 375 crore by existing investor Info Edge (India), which is the parent company of Naukri.com, according to the information provided in the red herring prospectus.
What is IPO?
An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance. Public share issuance allows a company to raise capital from public investors. The transition from a private to a public company can be an important time for private investors to fully realize gains from their investment as it typically includes share premiums for current private investors. Companies must meet requirements by exchanges and the Securities and Exchange Commission (SEC) to hold an initial public offering (IPO). An IPO can be seen as an exit strategy for the company’s founders and early investors, realizing the full profit from their private investment.
How does IPO work?
Prior to an IPO, a company is considered private. As a private company, the business has grown with a relatively small number of shareholders including early investors like the founders, family, and friends along with professional investors such as venture capitalists or angel investors.
When a company reaches a stage in its growth process where it believes it is mature enough for the rigors of SEC regulations along with the benefits and responsibilities to public shareholders, it will begin to advertise its interest in going public.
Typically, this stage of growth will occur when a company has reached a private valuation of approximately $1 billion, also known as unicorn status.
Zomato was founded as Foodiebay in 2008, and was renamed Zomato on 18 January 2010 as Zomato Media Pvt. Ltd In 2011, Zomato expanded across India to Delhi NCR, Mumbai, Bangalore, Chennai, Pune and Kolkata. In 2012, the company expanded operations internationally in several countries, including the United Arab Emirates, Sri Lanka.
With the introduction of “.xxx” domains in 2011, Zomato also launched zomato.xxx, a site dedicated to food porn. In May 2012, it launched a print version of the website named “Citibank Zomato Restaurant Guide,” in collaboration with Citibank, but it has since been discontinued.
- On 21 January 2020, Zomato acquired its rival Uber Eats’ business in India in an all stock deal, giving Uber Eats 10% of the combined business.
- On 29 June 2021, Zomato signed a deal with Grofers to invest nearly $120 Million in the online grocery firm by acquiring 9.3% stakes of the company
Breaches in security of users
On 4 June 2015, an Indian security researcher hacked the Zomato website and gained access to information about 62.5 million users. Using the vulnerability, he was able to access the personal data of users such as telephone numbers, email addresses, and Instagram private photos using their Instagram access token. Zomato fixed the issue within 48 hours of it becoming apparent. On 15 October 2015, Zomato changed business strategies from a Full-Stack market to an Enterprise market. This led Zomato to reduce its workforce by 10%, or around 300 people.