Zomato set to acquire 9.3% stake in Grofers, asks CCI nod

IPO-bound food delivery platform Zomato is set to acquire a 9.3% stake in e-grocer Grofers, according to a filing with the Competition Commission of India. The company is also looking to pick up an equal stake in Grofers’ wholesale entity Hands on Trade Private Limited, the filing showed. 

“The proposed transaction will have no impact on the competitive landscape in any potential relevant market in India, in any manner,” the filing submitted on Thursday said.

The development comes a day after it was reported that Grofers had signed a deal with Zomato and Tiger Global to raise $120 million. This deal is also expected to propel Grofers towards the coveted unicorn status. Economic Times had first reported about the deal. 

Zomato declined to comment and Grofers did not respond to our queries until the time of publishing. 

In the build up to the deal, Grofers’ co-founder Saurabh Kumar had exited the company in June, although he continues as a board member and shareholder in the company. 

While this deal is for a minority stake in Grofers, according to sources, Zomato aims to eventually acquire Grofers in the long run. In April last year, Entrackr had exclusively reported that the two companies were talking about a potential merger. 

It is worth remembering that Zomato had started a grocery vertical last year following COVID-19 induced lockdowns across India. However, it soon shut the vertical down. Zomato’s key rival in the food-tech business, Swiggy, on the other hand, has been pushing for grocery services via Supr Daily and Instamart.

If Zomato acquires Grofers, the deal would mark an end of independent play in the e-grocery space. In April, Tata Digital had acquired a majority stake in India’s largest e-grocer: BigBasket. Reliance is also in talks to acquire Gurugram-based e-grocer Milk Basket. 

While BigBasket and Grofers used to be the de facto leaders in the e-grocery delivery segment, Reliance’s entry into the vertical with JioMart has shaken things up. 

In fact, for the past several months, JioMart has been recording more traction and the number of daily orders on its platform has been more than the combined daily orders of BigBasket (excluding BBDaily) and Grofers.