Gurugram-based food delivery and restaurant discovery company, Zomato, is reportedly in talks with Berlin-based food delivery player Delivery Hero to divest its UAE business. The company may reportedly sell its business for $200 Mn-$250 Mn as it looks to focus its resources on its fight against homegrown rival Swiggy.
UAE was the first global foray of Zomato in 2012 and soon accounted for 20% of its orders. The company also launched its premium service Zomato Gold in UAE in 2017 and in one year had over 380 restaurant partners for over 15,000 Zomato Gold members. The companies reportedly denied commenting on speculations of the deal.
While the latest performance statistics for Zomato’s UAE business are not available to Inc42, it is speculated that the average order value is higher as compared to India. Both Delivery Hero and Zomato have about 35-40% market share in UAE and if the deal goes through, Delivery Hero will become the market leader.
In India, Delivery Hero was invested in Foodpanda but later sold it for 1% stake in Ola in 2017.
Zomato has been in a tough situation since its Bengaluru-based rival Swiggy raised $1 Bn in 2018, at the end to the year after joining the unicorn club earlier in the year. The company posted a 220% jump in revenue for FY18, launched a slew of new offerings, including Swiggy Super, Scheduled, Access, long-distance deliveries, and Capital Assist.
To challenge this, Zomato has also been in talks to raise a large funding round of $500 Mn-$1 Bn. Zomato recorded $1Bn in annual gross merchandise value. It also posted a 40% growth in its revenue for FY18 and targeted expansion to 100 cities across India.
It also claimed to have achieved 28 Mn in monthly order run rate as of December 2018. The two major players in the foodtech industry have been continuously chasing a larger piece of the market and have been experimenting with their services buckets as they look to outdo each other to get ahead in the race.
The foodtech unicorns are also facing ire of small to mid-size restaurant owners who have filed a petition to the Competition Commission of India and the Prime Minister’s Office alleging “misuse of dominant position by food delivery companies, including Swiggy, Zomato, UberEATS and Foodpanda.
[The development was reported by ET.]