Uber has decided to put its entire 7.8 per cent stake in restaurant aggregator Zomato on the block, according to people in the know.
The ride-hailing giant obtained this stake when Uber Eats’ India business was acquired by the food delivery major in January 2020 in a non-cash deal. The deal was then valued at Rs 1,376 crore.
According to a term sheet, total 612 million shares of Zomato would be up for sale at a price band of Rs 48- Rs 54 apiece. At the lower end, the share sale would fetch Rs 2,939 crore, while at the top end, the deal size could be Rs 3,305 crore. This block transaction is likely to take place on Wednesday.
Shares of Zomato last closed at Rs 55.6 apiece, up 20 per cent over the previous day’s close.
The term sheet, however, didn’t mention the name of the seller.
The number of shares put on the block matches the figure held by Uber. A query sent to Uber’s spokesperson remained unanswered.
Depending on where the deal gets priced, California-based Uber may make anywhere between 2.14x and 2.4x on its Zomato deal. The decision to sell its stake in Zomato comes within a week after the one-year post-IPO lock-in on Zomato shares ended.
BofA Securities is the sole investment bank handling the share sale.
Shares of Zomato have witnessed wild swings following the end of the lock-in period. Last week, the stock hit a low of Rs 40.6 and since has bounced back more than 35 per cent. Market players said the block transaction could once again put pressure on the stock.
Currently, Zomato’s shares are down 27 per cent over its IPO price of Rs 76 per share. Following its listing, the stock had more than doubled to touch a record high of Rs 169.
Through its maiden share sale, Zomato had raised Rs 9,000 crore in fresh capital. Only early-stage investor Info Edge had parted with a small portion of its stake worth Rs 375 crore in the IPO.
Zomato doesn’t have any identifiable promoter. The shareholding of its founders and all investors is part of public shareholding. As a result, experts believe, there could be a constant overhang on the stock of disinvestment by a large investor.
Besides Uber, China’s Alipay and Antfin held a 7.1 per cent and a 6.99 per cent stake, respectively, in Zomato at the end of the June 2022 quarter. Info Edge’s shareholding stood at 15.17 per cent. Tiger Global’s Internet Fund held 5.11 per cent and Sequoia Capital held 5.1 per cent.