Zomato: Lock-in period for anchor investors end
Shares of Zomato have declined about 15% in the last couple of sessions as the mandatory lock-in period for anchor investors ended on Monday, leading to some profit booking. The current sell-off in the broader market has also intensified the pressure on the stock.
Shares of Zomato hit the lows of Rs 120.60 on Tuesday. The counter traded at Rs 141.2 on Friday.
The recent selling spree has led to a sharp fall in the market cap of Zomato, which had breached the mark of Rs 1 lakh crore. The current market capitalisation of the stock is hovering around Rs 97,250 crore.
Zomato shares were still 6 per cent up from a 52-week low, touched on 23 July, while shares have come off nearly 20% from all-time high level.
Zomato had received about 35 times more bids from anchor investors than it intended to sell in its blockbuster initial public offering (IPO). The Gurgaon-based firm received bids worth Rs1.5 trillion from large funds compared with the Rs42 billion offered. It raised a little over Rs 4,196 crore from anchor investors ahead of its initial share sale.
Anchor investors are essentially brought in to boost investor confidence and gauge the demand for an IPO in the market.
Anchor investors are QIBs who agree to buy the company’s shares at a particular price by applying to invest at least Rs 10 crore in the IPO before it opens, according to the listing norms of the Securities and Exchange Board of India (Sebi). As much as 50% of the shares of an IPO can be offered to QIBs. Of this, up to 60% can be allocated to anchor investors. One-third of this is reserved for mutual funds.
Allocation to anchor investors is done on a discretionary basis for IPOs above Rs 250 crore. There is no cap on the number of anchor investors and additional 10 such investors are allowed for every additional Rs 250 crore worth of issue size, in which Rs 5 crore is minimum allotment required for each such investor.
There is a lock-in of 30 days on shares for every anchor investor, according to Sebi.
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