Indian food delivery startup Zomato drew bids worth $46.3 billion during the initial public offering (IPO) as it was more than 38 times oversubscribed on Friday.
The $1.3 billion IPO of Zomato, which is backed by China’s Ant Group, was the first in India’s food delivery sector. The Zomato IPO was priced at 72 to 76 rupees per share, giving it a valuation of up to $7.98 billion.
Institutional investors also placed major bets, with the subscription for their category at 52 times the shares on offer, stock exchange data after subscriptions closed on Friday showed.
Investors are placing bets on Zomato even though it flagged in its IPO draft prospectus that its costs and losses would continue to rise as it ramps up investments.
Before the IPO opened this week, Zomato raised $562 million from 186 big financial investors, including marquee names such as Tiger Global, BlackRock, JPMorgan and Morgan Stanley.
The Zomato IPO comes when India’s markets are near their all-time highs and there is growing interest from digital companies to list on bourses.
Alibaba-backed financial payments app Paytm filed draft papers in India for a $2.2 billion IPO, while Walmart’s e-commerce giant Flipkart is also planning one.
Just like U.S.-based DoorDash, Zomato is mainly a food delivery app, having partnered with 350,000 restaurants and cafes in 526 Indian cities. It also allows customers to book tables for dining-in, write food reviews and upload photos.
Zomato competes with local rival Swiggy, which is backed by Softbank, and Amazon’s still nascent food delivery service in a food delivery market that Boston Consulting Group expects will touch $8 billion by 2023, from just $4 billion last year.
The Zomato app has 41.5 million customers using its service on an average every month, and orders on its platform surged to 403.1 million in the year 2019-2020, from just 30.6 million in 2017-2018, its draft IPO prospectus showed.
