More financial spice is now being added to the Indian food delivery culinary. Zomato has received a $150M cheque from existing investor Ant financial, the recently IPOed financial arm of Alibaba Group. According to a report, with this new round, the company is now valued anywhere in the vicinity of $3 billion. However, the company hasn’t closed the round yet and is expected to raise about $500 million in this funding round. Nevertheless, such large cash from an existing investor does imply of positive outlook for the company.
Ant Financial, which is a finance arm of Chinese giant Alibaba, has been gradually growing its stake in Zomato. It picked up 14.7 percent stake in 2018 and with this follow-up backing, the Chinese company now apparently holds over 23 percent.
Zomato’s valuation, though in Billions, has grown in a rather stabilising fashion. It hasn’t been that usual, 500M to 3B story. The company was last valued at $2 billion when it secured $105 million funding last year and sold its UAE food delivery business to Delivery Hero for $172 million.
The new round of funding for Zomato comes at a time when the company is reportedly set to acquire UberEats India business. The deal, which is said to be a share-swap, could soon be finalised if all the terms are agreed upon. This fresh financing could well be a precursor to that deal. Currently, the deal values UberEats’ India at around $400 million and Uber may invest around $150 to $200 million in Zomato.
On the business end, things have recently become strenuous for India’s food delivery sector as a whole. More for zomato though, since it is among the earliest and largest. The food delivery aggregator has been battling protests from restaurant associations, including the National Restaurant Association of India, for forcing deep and predatory discounts.
India’s food delivery market is witnessing a fierce competition from two of its biggest players — Zomato and Swiggy. Both the companies, being heavily funded, are deploying their financial might in offering discounts to its users as well as to expand its operations in the country.
According to the regulatory filings, for the FY19, Zomato posted revenue of ₹1,397 crore on a loss of ₹1,001 crore. It shows that a large portion of the losses was largely due to advertising and promotions.
