It’s time for India’s biggest tech IPO.
According to a recent regulatory filing, food delivery startup Zomato plans to raise nearly $1.3 billion in an initial public offering in Mumbai this week. According to Refinitiv data, this would be the largest technology IPO in India, surpassing Tata Consultancy Services’ $1.17 billion IPO in 2004.
Zomato intends to close its books on Friday by selling shares at a price range of 72 to 76 rupees (97 cents to $1.02). Zomato would be worth nearly $8 billion at the high end of the price range.
Deepinder Goyal, the company’s founder, began Wednesday with a nervous tweet: “Just ordered a triple breakfast @zomato. Stress eating.”
Investors are keeping a close eye on the offering, which will reveal the market’s appetite for Indian startups. There are a lot of tech unicorns in the country — companies with a valuation of at least $1 billion — but none of them have ever gone public.
Analysts are concerned that Indian startups, many of which have raised hundreds of millions of dollars from private markets at exorbitant valuations, will need to demonstrate consistent profits and healthy exits for investors.
“This IPO is in some sense the beginning of the Indian digital ecosystem’s promises starting to get fulfilled,” Ashish Fafadia, partner at the Indian venture capital firm Blume Ventures, told CNN Business.
Investors will be looking at how the company performs after it goes public, as well as how well Zomato meets quarterly targets, he said.
“The ultimate long-term test would be if they are able to become a profitable business,” he added.
Goyal founded Zomato in New Delhi in 2008. With a team of more than 5,000 employees and a presence in more than 10,000 cities across two dozen countries, from Sri Lanka to Slovakia to South Africa, the company has established itself as one of India’s most successful startups.
In January 2020, the company made headlines when it announced the acquisition of Uber Eats in India, giving Zomato a major victory in its home market. As part of the deal, California-based Uber (UBER) acquired a nearly 10% stake in Zomato.
Zomato’s IPO this month could pave the way for more Indian unicorns to follow suit in the future.
According to media reports, Walmart-owned Flipkart is considering a public offering. Flipkart is the only Indian tech unicorn to have been acquired at a valuation of more than $1 billion.
GIC, the Canada Pension Plan Investment Board, SoftBank’s Vision Fund 2 and Walmart (WMT) were among the investors in the e-commerce company’s latest round of funding, which totaled $3.6 billion. Flipkart has a market capitalization of nearly $38 billion.
The IPO of Zomato will also be a litmus test for the world’s most closely watched food delivery industry. Despite much fanfare, Deliveroo’s IPO failed in London earlier this year, becoming the city’s worst debut ever.