Top shareholder Info Edge on the IPO


A Zomato Delivery boy adjusts a grocery order in his delivery bike amid the Covid-19 (Coronavirus) pandemic on November 8, 2020 in New Delhi, India.

Nasir Kachroo | NurPhoto | Getty Images

Indian internet company Info Edge has no plans to sell its entire stake in Zomato if the grocery delivery startup goes public, a senior executive said.

Zomato filed for an initial public offering of up to Rs. 82.5 billion ($ 1.1 billion) in April, in which the company will issue new shares valued at up to Rs. 75 billion. The company plans to use the proceeds to fund organic and inorganic growth initiatives, which may include mergers or acquisitions.

Info Edge, the startup’s largest shareholder, will sell shares valued at up to 7.5 billion rupees ($ 101 million), the company said in an IPO in April.

“We continue to invest in Zomato, we will not sell our entire stake,” said Chintan Thakkar, CFO and Executive Director at Info Edge, told CNBC’s Street Signs Asia on Tuesday.

Zomato participants

Info Edge was the first institutional investor to support Zomato and currently holds around 18% of the shares in the start-up. Other shareholders include rideshare giant Uber, Alibaba subsidiary Ant Group and Singapore state investor Temasek.

“What we announced is that we could hit up to $ 100 million,” he said, referring to the number of Zomato shares Info Edge could sell. “We still have the option of not paying even $ 100 million.”

“Most of our stake will likely stay in Zomato, so we will keep investing in it,” said Thakkar.

Thakkar didn’t want to reveal when Zomato’s IPO could take place.

He said anything Info Edge receives from the offering will be added to existing funds that are likely to be used in the company’s operations and can be used to buy or acquire a strategic minority stake in potential midsize companies.

Info Edge will primarily deal with technology startups or “anything that has a sizeable market and can disrupt the existing market,” he added.

India’s fragmented food delivery scene

Together with rival start-up Swiggy, Zomato dominates the US $ 4.2 billion grocery delivery market in India, which is highly competitive but also very fragmented.

In its prospectus, Zomato said it faces intense competition from chain restaurants that have their own online ordering platforms. Other competitors are cloud kitchens and restaurants that operate their own delivery fleets, as well as offline orders over the phone.

The company also said the pandemic had a significant impact on business last year as most restaurants were temporarily closed and many customers were unwilling to order outside food. Zomato said its restaurant service income was also severely impacted.

In February, Zomato said it raised $ 250 million from donors like Tiger Global Management and Fidelity. That was months after a $ 660 million financing round closed.

Clarification: This story has been updated to reflect Info Edge’s stake in Zomato as stated in the prospectus.