Meet the newest Indian unicorn: Zomato Media Pvt Ltd. Having just raised $200 million from Ant Financial Services Group - a subsidiary of China's largest e-commerce firm, Alibaba Group Holding Ltd - the online restaurant guide and food ordering start-up is now valued at about $1.1 billion. To remind you, unicorns are start-ups valued at over $1 billion, so named because of their rarity. So far there were only 10 such Indian firms.
The deal is a mix of primary and secondary share transactions. On February 1, Info Edge India Ltd, Zomato's single largest shareholder, said it will sell a 6.66% stake in the start-up to Ant for $50 million. Zomato also signed a definitive agreement to raise $150 million from Ant, which is looking to strengthen its foothold in South-East Asia and the Pacific. According to a statement by Info Edge, the primary and secondary sale of shares valued Gurgaon-based Zomato at about $880 million pre-money. The former - also the parent company for Naukri.com and 99acres.com - will continue to hold a majority (30.91%) stake in Zomato after the deal closes by April 15 this year while Alibaba is expected to own around 26% stake.
Incidentally, on the same day, while India was focussing on the Union Budget, Alibaba not only said it would buy a 33% stake in Ant Financial ending the existing profit-sharing arrangement, but also led a $300 million round in online grocer BigBasket. The Jack-Ma led company is clearly betting big on India's booming e-commerce market. Alibaba and its payment affiliate's other major foray into the foodtech space is the $2 billion investment in Ele.me, a Chinese online food delivery service.
Zomato actually has been chasing this funding deal for quite some time now - it had been widely reported by the media back in September 2017.
At the very least, it will help Zomato hang on to its leadership position at a time when competition is heating up from desi rivals like Swiggy - also reportedly in talks to raise fresh funding after the $80 million it landed last May - and Ola, which has recently acquired Foodpanda's India business to compete with UberEATS. Given that Ant has also invested in payments platform Paytm, it will be interesting to see if this new deal leads to any synergies going forward.
Zomato had last raised $20 million from existing investors Sequoia Capital, Vy Capital and Info Edge apart from a couple of new investors in April 2017. It had previously managed to raise $60 million from Temasek and Vy Capital back in September 2015. Since its launch in 2008, Zomato has reportedly raised roughly $225 million in capital. It has certainly put all the funding to good use - in September 2017 blog post, CEO Deepinder Goyal claimed that the company has turned "profitable", although he was talking about Ebitda not net profits. Then, earlier this year, investment bank Morgan Stanley reportedly valued it at $2.5 billion. So the New Year has certainly kicked off with a bang for Zomato.
with agency inputs
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