Exclusive: Zomato raising fresh capital from Delivery Hero, others

Online restaurant discovery and food delivery platform Zomato is raising around $62.25 million (Rs 440.86 crore) in a fresh funding round from a clutch of investors that include Berlin-based Delivery Hero.

Delivery Hero is leading the round with Rs 350 crore, according to Zomato’s latest filings to the Ministry of Corporate Affairs. It will get a 2.26% stake in Zomato.

The German food delivery company counts South African tech conglomerate Naspers as a large shareholder. Interestingly, Naspers is an investor in Zomato’s main rival Swiggy and had led its $1 billion fundraising round in December.

Chinese venture capital firm Shunwei Capital, who is also a new investor, is investing Rs 35.06 crore in Zomato in this round for a 0.23% stake . A third investor, Saturn Shine Ltd, is chipping in the remainder of the targeted sum for a 0.36% stake. Saturn Shine’s credentials couldn’t be immediately ascertained.

Earlier this month, Zomato Media raised Rs 284.42 crore ($39.7 million then) by from US-based growth equity firm Glade Brook Capital.

It could also not be ascertained whether the latest infusion was part of a larger funding round for the online restaurant discovery and food delivery firm. Zomato didn’t respond to requests for comment till the time of filing this report.

The development also comes amid speculations that  Zomato was looking to sell its business unit in the United Arab Emirates to Delivery Hero for about $200-$250 million.

The development comes weeks after TechCircle reported that Zomato was aiming to mop up as much as $1 billion in fresh funding from new investors, with existing backer Ant Financial likely to lead the round. Ant Financial is the payments affiliate of Chinese conglomerate Alibaba.

Zomato is said to be seeking a valuation of $3 billion by the end of its next fundraising exercise. Other media reports had stated that Chinese private equity firm Primavera Capital could be one of the potential investors.

SoftBank was also mulling an investment in Zomato at one point but TechCircle learnt that the Japanese investment giant subsequently set its sights on Swiggy. Zomato's last-known major  funding round took place in October last year when it raised 210 million (Rs 1,500 crore then) from Ant Financial.

Zomato’s valuation adviser Resurgent India recently said that the company will likely turn profitable by 2021 though its losses are expected to widen seven-fold for the financial year 2018-19 at Rs 766 crore from Rs 106 crore in 2017-18. It had clocked consolidated net sales of Rs 466 crore in 2017-18.

Zomato and Swiggy compete with the likes of FreshMenu, Uber Eats and Foodpanda India, which was acquired by homegrown cab-hailing major Ola in late-2017

Both Swiggy and Zomato posted net sales in the region of Rs 450 crore in the financial year 2017-18. For Swiggy, this was more than triple the number compared to the previous fiscal as it caught up with Zomato, which grew its operating revenue by 40%.

Zomato makes money through advertising, online ordering and subscription. The company, founded in 2008, offers its services in 63 cities across India, apart from 23 other countries.