In 2008, the Rs 11,563-crore Anil Dhirubhai Ambani Group-promoted
issue was subscribed 73 times, with demand at Rs 8.45 lakh crore. The Rs 15,199-crore Coal India IPO in 2010 saw demand worth Rs 2.32 lakh crore.
Investors bid for almost 27.51 billion shares of Zomato on the BSE and NSE combined against the issue size of 681.4 million.
Retail investors’ portion was subscribed 7.87 times, while the figure was 54.71 times for qualified institutional buyers (QIB). The amount reserved for non-institutional investors or high net-worth individuals (HNIs) was subscribed 34.80 times. The employee quota was undersubscribed, with demand at 68% of the shares set aside for them.
The IPO received more than 3.23 million applications, the second-highest after the Reliance Power offer, which got 4.78 million applications. Earlier this year, the Rs 1,176-crore Indigo Paints’ IPO, which was subscribed 117 times, got 3.02 million applications.
Success Attributed to Brand
Bankers attributed the success of the Zomato IPO, the first by a startup unicorn in India, to its brand and business, which are simple to understand. “Investors have recognised how disruptive these new-age technology companies are in terms of business scalability, and they believe many of them will end up as category leaders as the current population is more digital natives than ever before,” said V Jayasankar, head of equity capital markets, Kotak Investment Banking, lead banker to the issue. “In India, only 8-9% of the index weight is dominated by tech companies compared to 27% in the US, so there is a huge scope for digital-technology companies in one of the leading emerging markets.”
With the Zomato issue, India has seen Rs 39,303 crore raised through 25 IPOs this year, the second-highest so far in Indian capital market history for any calendar year. In 2017, 36 companies raised Rs 67,147 crore, the annual record.
Zomato shares with a Rs 1 face value were offered at a Rs 72-76 price band. The issue comprises a fresh issue of equity worth as much as Rs 9,000 crore and an offer for sale worth Rs 375 crore by existing investor Info Edge (India).
At the upper end of the band, the company will command a market capitalisation of nearly Rs 64,500 crore. That’s more than the combined market value of India’s half a dozen listed quick-service restaurant chains such as the franchisees of Domino’s, McDonald’s and Burger King, among others. Indian has 20 listed hospitality companies with an aggregate market capitalisation of about Rs 45,000 crore.
Zomato had raised Rs 4,197 crore from 186 anchor investors on Tuesday ahead of the IPO opening by allotting 552.2 million shares at Rs 76 apiece. The SBI Cards & Payment Services IPO in March 2020 saw participation by 74 anchor investors.