After being hit by the pandemic, Zomato is back in the game and is getting closer to its IPO issue, especially after the approval from the Securities and Exchange Board of India (SEBI), and the food tech platform has also increased its share size by offering 20 percent.

To top it off, the price band for IPO is now set from Rs.72-76, with the upper end being 70 percent more compared to Rs.44.8 per share paid by Large private market investors during a $ 600 million funding round that happened less than a year ago. Tiger Global and Kora Capital were the investors including Temasek, which had earlier purchased shares at a far lower price and brought an average acquisition cost to roughly Rs.31 per share.

Other investors did far better returns, since they had previously bought a stake from the firm.

However, the biggest acquirer from the investments in the food tech is indeed Info Edge (India) Ltd., as it was already into making investments in the firm back in August 2010. On a fluke, the latter’s acquisition cost is about Rs.1.16 per share and if it meant using the higher end of the IPO pricing band, the latter would be enabled to generate returns of about 6500 percent.

While private market investors have enjoyed extraordinary returns, public market investors may be a bit late to join the hub.

Coming to Zomato, the food tech’s share value is thought to be more or less correlated with the extent of its fundraising. Meaning, the larger the fundraising, the higher the price at which the funds are raised.

However, this could indicate that the IPO is the peak of fundraising, with future returns being significantly more modest. The Rs.9,000 crore raised during the IPO represents nearly 75percent of the company's total funds raised since its establishment (pre-IPO).

After the IPO, Zomato will have cash of Rs.15,000 crore, indicating that the firm will have minimal need for financing for a long time. Investors should expect modest returns until the company has a lot of success with large mergers and acquisitions.

Zomato had previously submitted its long-awaited drafted red herring prospectus to the SEBI to raise more than $1 billion through a mix of new stock issuance and share sales (DRHP).

The online food-tech platform said its initial public offering is expected to garner $1.1 billion (Rs.8,250 crore). As part of this, a new issue of equity shares worth Rs.7,500 crore (approximately $1 billion) will be issued.

Zomato's initial public offering is likely to exceed $1 billion, with the primary fundraising expected to be roughly 20 percent higher.

The platform's operating revenue climbed by 5.5 percent in three years, from Rs.466 crore in FY18 to Rs.2,604 crore in FY20.

However, Tiger Global, Kora, and Fidelity invested $250 million in the food tech platform, which boosted its value by $5.4 billion, up from $3.9 billion after raising $660 million in December last year.