Zomato’s blockbuster listing boosts start-up ecosystem

TIL Desk/Business/New Delhi/ The enthusiastic response to Zomato’s initial public offering (IPO) and the listing day surge is likely to act as a big boost to the start-up ecosystem. Market players say the successful stock market debut will encourage venture capital and private equity investors to back more domestic start-ups. Further, it will motivate more unicorns, unlisted firms worth more than $1 billion, to resist the temptations to list in the US make their debut overseas.

The food-delivery company’s Rs 9,375 crore maiden offering was considered a test case for other tech and start-ups waiting in the wings to go public. Zomato’s IPOs drew bids worth Rs 2.1 trillion as it was subscribed 40 times. On Friday, the stock ended with a gain of 66 per cent. Many see this as a sign of a mature capital market and a sign that domestic investors are open to back companies that are not making any profits or conform to the normally accepted benchmarks.

“The stellar debut of Zomato on the domestic bourse after attracting robust subscription is a testimony to the fact that investors are willing to bet big on new-age technology companies which have the characteristics of a disruptive business model. With growing internet penetration and the number of smartphone user base increasing month after month, the entire private digital ecosystem will enable wealth creation and further deepen our capital market in the coming years,” said S Ramesh, managing director and CEO, Kotak Mahindra Capital Company.