- Zomato raised $150 million funding from established investor Ant Financial, said people familiar with the issue, valuing the $3 billion site for online food delivery and restaurant discovery.
Zomato raised $150 million funding from established investor Ant Financial, said people familiar with the issue, valuing the $3 billion site for online food delivery and restaurant discovery. The capital is part of a funding round of more than $500 million that is likely to close in the next two months, another person in the know said.
Ant Financial, a Chinese internet affiliate behemoth Alibaba, has been supporting Zomato since it acquired a 14.7 percent stake in 2018. It followed the regulatory filings showed up by rising its holding to 23 percent in November of the same year.
The new investment comes at a time when Uber’s ride-hailing app is looking to potentially invest in Zomato and sell its UberEats food supply business in
The stock-swap deal, estimated at $300 million, may go through in the near future if all terms are decided, sources said, but it is not certain whether Uber will continue with the investment. ET first reported on December 16 last year about Uber’s potential investment in Zomato.
Since selling its UAE delivery business to Berlin-based Delivery Hero for $172 million (Rs 1,220 crore) and raising $105 million separately, Zomato was last estimated at $2 billion when it picked up capital last year. The food supply aggregator has faced protests from restaurant groups, including India’s National Restaurant Association, to force deep discounts.
The latest funding will help build ammunition for the Gurugram-based company as it fights a bruising war to fend off the Swiggy competitor. In December 2017, Swiggy last raised $1 trillion led by existing Naspers backer, along with China’s Tencent, Hillhouse Capital, and Wellington Management.
Over the past year, Zomato has more than halved its cash burn from $45 million to less than $20 million a month in an attempt to increase its runway. Swiggy also started focusing on sustainable unit economics at the end of last year and introduced programs to minimize cash burn, which was estimated at about $30 million, suggesting that the sector was heading towards better economics.
According to regulatory filings, Zomato reported revenue of Rs 1,397 crore on a loss of Rs.1,001 crores for FY19. Much of the losses were linked to ads and promotions.
The trading arm of diversified financial services firm HSBC raised the valuation of Zomato to $3.6 billion last year after taking stock of its publicly traded shareholder InfoEdge, which owns 26 percent on the recommendation site for restaurants. HSBC said the business of Zomato had fundamentally changed in a detailed report on Info-Edge, with food delivery now contributing about 70 percent to total revenue.
“Given the scope of its recent expansion and the need for further funding, we value Zomato on a discounted cash flow basis, at $3.6 billion (at a marginal 9% premium to its competitor Swiggy as of the latest round of funding) versus $0.9 billion earlier due to the change in business focus,” the report noted.
