Zomato in talks with Ant Financial to raise $100200 million
Deal may value Zomato at $800 mn to $1 bn
Food ordering and restaurant discovery platform Zomato Media Pvt Ltd is in talks with China’s payments giant Ant Financial Services Group to raise $100-200 million, three people familiar with the matter said.
The deal, which hasn’t been finalised, may value Zomato at between $800 million and $900 million, said two of the three people cited above. The third person said Zomato’s valuation may exceed $1 billion. All three declined to be identified because the talks are confidential. Zomato has been in the market to raise funds since the beginning of 2017.
The firm declined to comment. Ant Financial, which is the payments business connected with China’s largest e-commerce firm, Alibaba Group Holding Ltd, didn’t immediately respond to emails seeking comment.
Since starting out in 2008, Zomato has raised roughly $225 million in capital. It last received fresh capital in September 2015, when it raised $60 million from Singapore’s Temasek Holdings and Vy Capital. Sequoia Capital and Info Edge are the other institutional investors in Zomato.
For Ant, Zomato is attractive partly because the Chinese firm is bullish on hyperlocal businesses despite the fact that most such startups in India have failed. Ant Financial believes that, over time, India could also sustain a business such as Meituan-Dianping, a hyperlocal platform in China that is one of the most valuable internet companies there, said the people cited earlier.
Ant Financial is also looking to strengthen its foothold in Southeast Asia, India and markets such as New Zealand and Australia.
In August, Ant tied up with Yelp Inc in the US to cater to Chinese tourists. The partnership let Ant Financial users make payments in restaurants across the US.
An investment in Zomato is seen as a move by Ant Financial to continue to follow Chinese tourists in South-east Asia (one of the largest markets for Zomato in terms of traffic is Jakarta), Australia and New Zealand.
If the deal with Ant Financial goes through, Zomato could also work more closely with payments firm Paytm, which counts Ant as one of its largest investors. Paytm is in advanced talks to acquire two hyperlocal deals sites, Mint reported on Tuesday.
One of India’s most successful Internet startups, Zomato was blindsided by the fast expansion of food ordering platforms such as Swiggy (Bundl Technologies Pvt Ltd) in 2014. In 2015, Zomato, which had stayed away from offering food delivery services, was forced to introduce food ordering on its platform.
Zomato’s fight with Swiggy is expected to be costly for both— and Swiggy’s fund-raising shows as much. Since starting out in 2014, Swiggy has already raised over $160 million in equity and debt including $80 million in May from Naspers Ltd and others.
The two firms will soon face another well-funded rival: CureFit, a fitness and healthcare startup.
While food ordering is only 20% of CureFit’s business, the company wants to expand it and expects food to become its largest revenue contributor within the next three years.