5 May , 2021 Fdiindia
SEBI To Check If Chinese Investor Ant Group Has Any ‘Control’ In Zomato
The Securities and Exchange Board of India (SEBI) is looking into Zomato's draught red herring prospectus (DRHP), a registration document submitted by IPO-bound firms, to see whether the company's Chinese sponsor Ant Group has some influence.
The markets regulator is also looking at whether the Ant Group would be given any dividend or privileges securities following its listing, which would entail clearance under China's revised foreign direct investment (FDI) rules.
“We're looking at those things, such as whether Chinese investors dominate start-ups and whether international investors have a controlling interest under the Takeover Code. And, since it (Zomato) is sponsored by a Chinese company, it needs to be clear if it involves any prior approval or authorization under the current regime's press note 3,” a source told Business Standard, which broke the storey first.
Anti-Financial has been a Zomato investor since 2018, when it purchased a 14.7 percent interest in the business. Last year, its stake in Zomato was raised to 25%. Ant has put INR 3,243 crore into the Indian foodtech unicorn. Zomato has secured $2.1 billion in total funding, with a $660 million round set to close in December 2020. In February, the firm earned $250 million (over INR 1,800 crore) from Tiger Global, Kora, and others, bringing its total value to $5.4 billion. More information on Zomato's shareholding arrangement can be found here.
The right to select a majority of directors, the right to control management, and the right to control policy decisions are all described as having ‘control' in a business by SEBI. Persons or organisations owning securities or possessing exclusive obligations under a shareholders' arrangement usually practise those rights.
Zomato submitted its DRHP last month in preparation for its $1.1 billion initial public offering (IPO) later this year. The firm would sell equity securities worth up to INR 8,250 Cr (nearly $1.1 Bn), according to the prospectus. INR 7,500 crore would be a new concern, while INR 750 crore would be a bid for sale to Info Edge, the company's current investor.
On April 27, Info Edge announced that it would offer 750 million shares of the forthcoming Zomato IPO.
Zomato also announced in its DRHP that the quarter ending December 2020 (Q3 FY21) was the company's best-ever in terms of gross order value (GOV), surpassing the company's pre-Covid figures. Zomato's GOV increased by 7% in Q3FY21, to INR 2,981 Cr, relative to the same time in FY20, when it was INR 2,785.2 Cr.