Bengaluru: Food ordering and restaurant discovery platform Zomato Media Pvt. Ltd has raised $200 million from Ant Small and Micro Financial Services Group, valuing the company at about $1.1 billion.
The funding includes a $50 million secondary share sale by Zomato’s key shareholder Info Edge (India) Ltd to Ant Financials, which will dilute its stake in Zomato to about 30.91% post the fresh capital infusion, the firm informed BSE on Thursday evening.
The primary and secondary sale of shares values Gurugram-based Zomato at about $880 million pre-money, according to the statement filed by Info Edge that runs job portal Naukri.
Ant Financial is the payments business connected with China’s largest e-commerce firm Alibaba Group Holding Ltd.
Mint reported in September, that Zomato was in talks with Ant Financial Services Group to raise $100-200 million, valuing Zomato at between $800 million and $900 million.
Ant finds Zomato attractive as the Chinese firm continues to be bullish on hyperlocal businesses despite the fact that most such start-ups in India have struggled to succeed. 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, Mint reported, citing people familiar with the matter.
Ant Financial is also looking to strengthen its foothold in South-East 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 there. The partnership let Ant Financial users make payments in restaurants across US.
An investment in Zomato is largely 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.
“The expected date of completion of sale/disposal is on or before 15 April 2018," Info Edge notified BSE.
According to the filing, Zomato recorded, on a consolidated basis, net sales of Rs332.27 crore in 2016-2017.
“Post the aforesaid fund raise by Zomato and sale/transfer of shareholding by the company/ NSIL (Naukri) as mentioned above, Info Edge’s aggregate shareholding in Zomato shall be about 30.91% on a fully converted and diluted basis," it added.
Before the share sale Info Edge owned about 44.74% stake in Zomato.
“No comments. We are a cockroach company; we are very focused on our work, and this round is not going to change that," co-founder Deepinder Goyal said in an interview.
A cockroach start-up is defined as one which keeps struggling, going forward in spite of changing environments, market conditions and investment scenarios.
Zomato has been in the market to raise funds since the beginning of 2017. 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.
This deal could also see Zomato working more closely with payments firm Paytm, which counts Ant as one of its largest investors.
One of India’s most successful internet start-ups, Zomato has been in the news lately for its varied valuation levels by different brokerage firms. The current round could put the valuation talks to rest.
In last six months, three brokerages—Morgan Stanley, HSBC Securities and Nomura Financial—have valued the food technology firm at extremely varied valuation levels ranging from $700 million to $2.5 billion.
Zomato, which competes with Bengaluru-based Swiggy (Bundl Technologies Pvt. Ltd), was blindsided by the fast expansion of food ordering platforms 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 the companies—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.