Info Edge confirms Tencent investment in PolicyBazaar; may consider Zomato stake sale in April-May

Chinese technology conglomerate Tencent Holdings now owns 10% of insurance platform PolicyBazaar, following the acquisition of shares from existing investor Tiger Global Management. The secondary transaction was completed in the second quarter of the current financial year, Info Edge told analysts during a call on Tuesday for its second quarter earnings.

Tencent bought Tiger Global’s stake for $150 million, valuing the ETechAces Marketing and Consulting, the Gurugram-based company that owns PolicyBazaar, at $1.5 billion. 

In July this year, media reports said that Tiger Global was in talks with Tencent and existing PolicyBazaar investor SoftBank for a potential stake sale. The New York headquartered alternative investments firm held a 21% stake at the time. 

Delhi headquartered Info Edge, owner of jobs platform Naukri among several other online businesses, owns about 19% of Policybazaar. Commenting on its investment, Info Edge executive vice chairman Sanjeev Bhikchandani said that the company will hold its stake for now. “We neither want to increase nor decrease our shareholding in Policybazaar,” he said. 

PolicyBazaar, founded in 2008 by Yashish Dahiya and Alok Bansal, raised a $150 million growth funding round in May this year led by Japanese conglomerate SoftBank.

Bhikchandani also spoke in some detail about restaurant aggregator and food delivery platform Zomato, in which Info Edge holds a little over a 26% stake. The Gurugram-based foodtech unicorn, which has been in the eye of a storm lately on account of the #Logout campaign mounted against it by restaurant associations, halved its cash burn with an eye on breaking even, he said.

“Zomato has managed to reduce (cash) burns from $45 million per month in March to $20 million in October. There is a clear agenda and programme on continuing growth in terms of value and GMV,” he told analysts, adding that it is possible that the company may achieve break even by next year. 

“As far as Zomato, we are not looking at secondary sale as of now. If it reaches breakeven by March or April, things might be different,” Bhikchandani said.

The company, he said, has been able to scale operations to beyond Tier 2 cities by cutting discounts and marketing costs at the lower end product level. “Zomato has cut down on misuse and abuse of the platform where people would split a single order into two or three separate orders for discounts,” he said.

Info Edge is also watching Amazon’s entry into the food delivery space closely. “Food delivery is a very different product. You want the food to be delivered within 30 minutes of placing the order. We are watching it (Amazon’s entry) closely but are confident that Zomato will be able to grow and defend itself,” added Bhikchandani.

In its earnings report for the first half of the current financial year released in October, Zomato said that its burn rate was down 60% through cost optimisation The company also claimed a 225% increase in revenues at $205 million for the April to September 2019 period.

During the call the company also announced follow-up investments in Shopkirana, ShoeKonnect and Happily Unmarried which owns and operates men’s lifestyle brand Ustraa.