In a tell-all memoir ‘Doglapan: The Hard Truth about Life and Start-Ups‘, the ‘Shark Tank‘ judge said his Rs 100 crore application for Zomato IPO left everyone surprised on how he could manage the huge amount of money.
“It was, however, a case of simple leverage—IPO financing. While I invested Rs 5 crore from my pocket, Kotak Wealth got me financing for Rs 95 crore at an interest rate of 10 per cent annualized for a week (the period for which IPO funds get blocked). This cost of Rs 20 lakh as interest was an additional cost for acquiring the shares,” Grover said in the book published by Penguin.
With the IPO being oversubscribed more than thirty times, he got an allotment of shares worth over Rs 3 crore. On 23 July 2021, when the new-age stock debuted on exchanges at Rs 115 per share against the issue price of Rs 76 per share, he sent a mandate to his wealth managers to sell all his shares.
“By the time the trade got executed, I got a selling price of Rs 136 per share. With my landing cost after interest being between Rs 82–85, I ended up making over Rs 2.25 crore,” said the poster boy of start-up India.
The IIM-Ahmedabad and IIT-Delhi graduate explains he was bullish on Zomato IPO on several counts.
“Of course, I knew of Deepinder, and I am a big believer in his ability to persevere and keep building big. Fundamentally, with the pandemic, the ticket size of their orders had grown, as people were ordering food from home for 3–4 members in the family, as against single rolls in office, thereby increasing Zomato’s absolute margins,” said the entrepreneur and investor.
Moreover, he said, with restaurants completely dependent during lockdowns on app orders, there was no risk of the take rate coming down. “On the other hand, job insecurity among delivery boys kept delivery costs in check. In fact, Covid magically solved the food delivery economics in the country overnight, just like it skyrocketed UPI penetration,” he said.
After success in Zomato, greed got the better of him as he went in for Car Trade IPO but ended up losing Rs 25 lakh there.
In the book, he makes it clear that creating a stock market public equity portfolio is not his cup of tea. “I have been certain that if you hedge your bets, you get mediocre returns. What excites me is putting money behind high-risk early-stage founders,” he wrote.
