Homegrown cab aggregator Ola acquired Foodpanda India from Germany-based Delivery Hero Group for $31.7 Mn (INR 202 Cr). As per its filings with the Ministry of Corporate Affairs, Ola parent ANI Technologies issued preference shares worth $4.4 Mn (INR 28 Cr) last month to Pisces eServices, the Indian company that operates Foodpanda.
While the companies did not disclose the details of the deal size, sources at the time had pegged the stock-based acquisition at under $50 Mn. This deal included the transfer of Foodpanda’s India business to the cab aggregator in an acquisition deal in exchange for Ola stock.
As part of the deal, Delivery Hero reportedly invested $27.3 Mn (INR 174 Cr) in SoftBank-backed Ola, thereby acquiring 1% stake in the ride-hailing unicorn. Ola, in turn, infused the $27.3 Mn from Delivery Hero into Foodpanda India, in a bid to bolster its business.
At the time of the announcement, Ola also committed to investing $200 Mn in Foodpanda India. However, it seems that the $27.3 Mn capital infusion in the foodtech startup was not part of the proposed investment.
According to a senior Ola executive, the deal was more than just the acquisition of Foodpanda by Ola. It was mainly about DeliveryHero and ANI Technologies joining hands to strengthen the food delivery platform’s business in India.
Bhavish Aggarwal, co-founder and CEO at Ola had stated at the time, “I’m excited about our partnership with Delivery Hero as we team up to take Foodpanda India to the next level. As one of India’s pioneers in the food delivery space, Foodpanda has come to be a very efficient and profit-focused business over the last couple of years. Our commitment to investing $200 Mn in Foodpanda India will help the business be focused on growth by creating value for customers and partners. With Delivery Hero’s global leadership and Ola’s platform capabilities with unique local insights, this partnership is born out of strength. I look forward to welcoming the Foodpanda India team to the Ola family.”
Post the acquisition, Saurabh Kochhar, former CEO of Foodpanda India, exited the company, with Pranay Jivrajka, Founding Partner at Ola taking over as the food delivery company’s interim CEO.
Incidentally, South African Internet conglomerate Naspers has become an indirect shareholder in Ola, given that it currently owns 23.6% stake in Delivery Hero.
Foodpanda India: An Overview Of Its Stats
Foodpanda currently has a network of 15,000 restaurants across 150+ cities. In December 2016, parent Foodpanda was acquired by Delivery Hero, one of the leading global players in food ordering and delivery marketplace, which went public with a $ 1.1 Bn IPO in June 2017.
In November 2017, Foodpanda India claimed revenues of $9.6 Mn (INR 62.16 Cr) in FY 16-17, a 64% jump over the earlier $5.87 Mn (INR 37.81 Cr) in FY 15-16. The company credited its strong growth for the year to the success achieved in its key markets. It currently has a network of 15000 restaurants across 150+ cities.
The company aimed to be profitable by FY 2019 riding on its strategies such as third-party delivery logistics through Dash, food recommendation and discovery through the revamped India app, bringing Shahrukh Khan as the face of the brand and working on food quality initiatives such as the Food Doctor Program.
Foodpanda India currently competes with players like Swiggy, Zomato, UberEATS, Google Areo and soon to be launched Flipkart’s one-stop app. Speculations were rife that Flipkart might invest $50 Mn in Swiggy for tapping the food delivery space.
No Stopping For Cab Aggregator Ola
Founded by Bhavish Aggarwal and Ankit Bhati in January 2011, Ola, on the other hand, is present in 110 cities across the country. Ola’s wide array of services includes online booking of auto-rickshaws and bikes, as well as vehicles. It has also come up with a connected car platform for ridesharing called Ola Play.
Till date, Ola has raised funding of $3.9 Bn in 11 rounds from about 20 investors. In November 2015, Didi Chuxing along with Baillie Gifford, Falcon Edge Capital, Tiger Global, SoftBank Group and DST Global had participated in a $500 Mn Series F funding round in the homegrown cab aggregator.
The funding round of $350 Mn raised in February 2017 took its valuation to about $3.5 Bn. Later in June, the cab booking platform reportedly picked up about $50 Mn funding from hedge fund Tekne Capital Management, as an extension of its ongoing round.
Later in October, the ride-sharing startup confirmed a $1.1 Bn investment in a round led by Tencent Holdings Limited, in exchange for a 9.75% stake. In the official statement, Ola also revealed that it was in advanced talks with other investors to close an additional $1 Bn as part of the same financing round, taking the total fundraise to over $2 Bn.
In November 2017, it was reported that Ola is looking to become profitable by FY 2019. As per a valuation report filed with the ministry of corporate affairs compiled by chartered accountancy firm Jain Ambavat and Associates, Ola is projected to become profitable during 2018-19 and report a net operating profit of over $180.7 Mn (INR 1,170 Cr), which is further expected to grow further to $992 Mn (INR 6,423.33 Cr) by FY 2020-21.
Most recently, reports surfaced that Ola was looking to enter the cab aggregator market in Australia and New Zealand, after setting up teams in Bangladesh and Sri Lanka last year.
The online food services market in India is expected to reach $2.9 Bn by 2019. For Ola, the acquisition of Foodpanda India is a strategic move aimed at not only gaining a stronghold in the India online food delivery market, but also driving revenue in order to become profitable by FY19.
Update 1: 12th January 2018
The original title stated that Ola had acquired Foodpanda India for $4.4 Mn (INR 28 Cr). Changes have been made to reflect the correct figures.