Delivery Hero leads $62 Mn fresh round in Zomato; no clarity on UAE biz acquisition

A month ago, there were reports flying about how Delivery Hero, Germany based foodtech major, wants to buy Zomato’s UAE business for about $200-250 million.

While there is no news on the acquisition front yet, the firm led the latest funding in Zomato with an investment of Rs 350 crore for a 2.26 per cent stake.

In total, the round is worth Rs 440.86 crore ($62.25 million) and two other investors also have participated. Shunwei Capital, a new investor, has poured in Rs 35.06 crore for 0.23 per cent stake. Saturn Shine Ltd. another new investor has contributed the remaining Rs 55.8 crore for a 0.36 per cent stake.

The interesting part about the deal is that the leading investor Delivery Hero is backed by South African tech conglomerate Naspers. The same Naspers that backs Zomato’s largest foodtech rival in the country - Swiggy.

A few months ago it was seen leading a $1.3 billion round in Swiggy, and now one of its portfolio company is buying a stake in Zomato.

At the same time Delivery Hero’s India business, foodpanda was acquired by Ola. Following the acquisition, it owns 1 per cent stake in ANI Technologies.

Coming back to Zomato, in the last month, this wasn’t the only money raised by the Gurugram based food tech major. It had also picked up around Rs 284.42 crore ($39.7 million) from Glade Brook Capital, a growth equity firm in the US.

Zomato's last major funding round was in October 2018 when the firm moped about Rs 1,500 crore ($210 million) with Ant Financial (Chinese conglomerate Alibaba’s payment entity) leading the round.

It is now being speculated that this is the part of a new round which Zomato aspires to take upto $1 billion. The post-money valuation after this round, if it happens, is expected to go to $3 billion.

The staggering new round is also likely to be led by Ant Financial and might count Primavera Capital as key investors as well, however, the firm is a little unwilling to give more stake to Ant Financial. Hence, it is looking to secure funds from different and new investors.

But again, as mentioned in previous articles as well, the game of discounts, cashbacks, and order statistics is so hyped up in India, these foodtech majors have to constantly secure investment to fund these heavy price cuts. In such a case, if Ant Financial is the major accessible source of funding, then that might be it.

Case in point, it is being said in a VCCircle report, that the losses of Zomato Media are expected to increase sevenfold in FY19 from Rs 106 crore in FY18 to Rs 766 crore now.

It remains to be seen whether Zomato actually sells UAE biz to Delivery Hero and Zomato ropes in Ant Financials as the anchor investor or not. Interesting times ahead.