Inside the Zarea Limited IPO

With the coming of the technological age, it was inevitable that the stock exchange would see an influx of technology-based issues and listings taking place. Companies like Netsol and System Limited have been part of the exchange for a long time. It is only recently that The Resource Group (TRG), Symmetry, Octopus Digital, and Avanceon have been listed. Many of these companies either operate a software house or provide a digital solution to the market. 

Now it seems a new player is trying to get listed, however, it is not the company but its prospectus to the Initial Public Offer (IPO) that is generating a buzz in the market: Zarea Limited.  

A digital technology company which operates a B2B platform specialising in commodity trading, procurement and delivery, Zarea runs its own proprietary platform which allows buyers and sellers to interact, monitor prices and place their orders in real time. The platform functions on desktop and mobile applications while it runs a marketplace in commodities like cement, steel, building materials and agricultural biomass. 

The business model is centered on platform fees that are charged to buyers for being able to meet, interact and carry out a transaction with the seller. Consider it like a facilitation fee being charged for creating a market for the buyer and seller in the first place. The company also provides logistical and storage solutions through third parties. But why is it going for an IPO now? 

Growing ambitions

Established in 2020, Zarea started off small but is now looking to expand its portfolio of commodities to include coal, chemicals, grains, pulses, sugar, fertilizers, cotton and yarn in order to diversify its risk and grow its revenue stream. With a brief history of five years, Zarea feels it is in prime position to grow its footprint on the back of digitization taking place which is being driven by technological solutions. Based on the scalability of the business and the focus towards diversification will allow the company to increase revenues and profitability.