SUMMARY
Ctrip funding may value Zomato at $1.8-2 Bn
Zomato may raise a $400 Mn funding round with participation from Ant Financial, others
The companies may explore synergies, which will be more strategic in nature going forward
The Indian foodtech war has reached a fever pitch with more restaurants and deals on offer than ever before and food delivery platforms going green by giving their customers options to opt out of cutlery, offering eco-friendly packaging etc.
Meanwhile, food delivery giants Zomato and Swiggy are betting on their Unicorn tags for their next rounds of funding. The latest buzz comes from Zomato, which is expected to raise nearly $100 Mn from China’s largest travel-booking site, Ctrip, in a financing round that could go up to $400 Mn (Rs 2,800 Cr).
According to a report, the funding is expected to value Zomato at $1.8-2 Bn; its existing investor Ant Financial — a Chinese fintech company which is an affiliate of Chinese ecommerce giant Alibaba — and a couple of others are also expected to participate in the funding round.
The report further added that people privy to the development said that discussions between Zomato and Ctrip are in the last leg, with only the final amount yet to be decided.
“It is likely to be around $100 million. While the investment is purely financial, the two companies may explore synergies, which will be more strategic in nature going forward,” the report added.
Another source was cited as saying that the transaction should be closed in two weeks. A Zomato spokesperson declined to comment on the development, according to the report.
Ctrip: Second Bet In India?
The Nasdaq-listed Ctrip hasn’t been among the most active Chinese strategics in India, with a sole investment in online travel agency MakeMyTrip. If the deal with Zomato goes through, it will be significant as the first such bet outside of travel services for Ctrip, which has a market capitalisation of over $20 Bn.
Earlier, Ctrip acquired Scottish travel site Skyscanner for $1.7 Bn and also owns Tours4Fun, travel research site Trip.com and Trip by Skyscanner. It’s ranked among the top four online travel agencies worldwide along with Expedia, TripAdvisor and The Priceline group.
For Zomato, getting one of the biggest strategics in the online travel sector on board will be notable as it attempts to expand and grow aggressively in international markets.
Zomato: Fighting A Food War Against Swiggy
After raking in million dollar fundings from their deep-pocketed investors, both Swiggy and Zomato are now playing their game on the consumer front in India, while simultaneously strengthening their restaurant partner network.
Recently, Zomato announced its 12th acquisition with foodtech startup Tonguestun.
Zomato has acquired four Indian startups (including Tonguestun), which include Bengaluru-based Runnr, a B2B online service provider platform for hyperlocal logistics service; Delhi-based MapleGraph; and a tech-based logistics company named Sparse Labs.
Other global startup acquisitions by Zomato include NexTable, Mekanist, Urbanspoon, Cibando, LunchTime, Obedovat, Menu Mania, and gastronauci.pl.
Recently, reports surfaced that Japanese conglomerate SoftBank’s Vision Fund was examining an investment in either of the two giants — Swiggy or Zomato.
It is being suggested that Softbank’s talks with Zomato’s have advanced further than its discussions with Swiggy and the company is looking to raise nearly $500 Mn in its next round.
If SoftBank bets on Swiggy (which is also expected to raise $500 Mn), the company would be valued at more than $2 Bn — a 54% jump from its recently achieved Unicorn status at a valuation of $1.3 Bn. The foodtech company was also looking for a $400 Mn funding recently after it saw a 45% year-on-year growth on a revenue of $74 Mn in FY 18.
In fiscal 2018, Zomato had a revenue of $74 Mn, compared to $51 Mn in the previous fiscal with a reported loss of $54 Mn.
According to a study by Netscribes Research, the online food delivery segment in India is expected to expand by 34%-36% between 2015 and 2020.
Even as Zomato and Swiggy vie for greater customer acquisition, the food delivery segment is witnessing increasing competition with the entry of global players such as UberEATS and Google Areo.
[The development was reported by ET.]
