NOMURA VALUES FOOD TECH FIRM ZOMATO AT $1.4 BILLION

NEW DELHI: Nomura Financial Advisory and Securities (India) Pvt. Ltd has valued Zomato Media Pvt. Ltd at $1.4 billion at a time when the food technology start-up is in talks with Chinese payments firm Ant Financial Services Group to raise from $100-200 million.

“Zomato, in our view, is the only global scalable India player with potential to target spending across the entire restaurant value chain—advertising, food ordering and table booking, while demonstrating growth with low customer acquisition costs,” Nomura analysts Ashwin Mehta and Rishit Parikh wrote in a report dated September 15. Mint has reviewed a copy of the Nomura report.

Mint reported on September 5 that Zomato was likely to be valued at $800-900 million in its fundraising talks with Ant Financial, an arm of Alibaba Group Holding Ltd.

Zomato was valued at around $1 billion when it raised $60 million from Singapore’s state-run investment firm Temasek Holdings Pte. Ltd in September 2015 in its last fund-raising.

“We have had a standing start to our food ordering business, and now more than half of the organisation focuses on the transactions business (food ordering and table reservations). The advertising business has also matured and is growing really well,” a Zomato spokesperson said in response to queries from Mint.

However, like a few other Indian consumer technology start-ups, its valuation was questioned a year later as market participants argued that competitive pressure and high-cash burn did not support its lofty valuation.

HSBC Securities and Capital Markets (India) Pvt. Ltd valued Zomato at $500 million in May 2016. Zomato and its biggest investor Info Edge (India) Ltd disputed HSBC’s estimate. Info Edge, which owns 47% of Zomato, said the company had plenty of cash “and its unit economics are really good.”