Alibaba affiliate Ant Financial invests $150 mn in Zomato at $3 bn valuation

Food-tech unicorn Zomato Media has raised $150 million from existing investor Ant Financial as part of a larger round. The deal values the Gurugram-based restaurant aggregator and food delivery platform at $3 billion, pre-money.

"We confirm that we have raised $150m from Ant Financial as a part of a larger round. Ant Financial has been a steadfast partner in our journey towards achieving market leadership in on-demand food delivery in India, and dining out globally," a Zomato spokesperson confirmed the development to TechCircle.

Separately, Zomato's early investor Info Edge confirmed the deal in a stock exchange filing on Friday. Post the closure of this funding round, Info Edge’s shareholding in Zomato will drop to about 25.13% on fully converted and diluted basis, the filing said.

Ant Financial is the payments affiliate of Chinese conglomerate Alibaba.

Alibaba Group first invested in Zomato in February 2018 when Ant Ant Financial's mobile-payments app Alipay invested $200 million in the company, valuing the firm at more than $1 billion. The deal included a primary fundraise of $150 million and a purchase of stake worth $50 million from Info Edge.

Later in October 2018, Alibaba Group’s payment affiliate Alipay Singapore Holdings infused $210 million into the company.

Zomato’s last known funding round was in March last year when it sold off its UAE business to Delivery Hero while also raising fresh capital from the Berlin-headquartered online food delivery firm. During the round, Zomato raised around $62.25 million from a clutch of investors including Delivery Hero and Chinese venture capital firm Shunwei Capital.

In February 2019, it raised Rs 284.42 crore from the US-based growth equity firm Glade Brook Capital.

Zomato was founded in 2008 by Indian Institute of Technology-Delhi alumni Deepinder Goyal and Pankaj Chaddah, who were both executives at management consultancy firm Bain & Company. Chaddah resigned from the company early last year.

Zomato makes money through advertising, online ordering and subscription. Today, it offers food delivery service in over 500 cities across India, and claims to be contribution margin positive across the country.

In October last year, the company had announced that its revenue increased 225% to $205 million in the first half of the financial year 2019-20 from $63 million in the same period last year. Its monthly burn rate was down 60% due to optimising costs without affecting new product launches or innovation, it said in its earnings report. It completed 214 million orders in the first half of the financial year, averaging about 35 million orders a month and recording a GMV (Gross merchandise volume) of $821 million. The average monthly transacting users increased from 3.6 million in H1FY19 to 11.2 million H1FY20 while increasing order frequency to 3.6 times a month from 3.1 in the same period.

Zomato has repeatedly been linked to merger deals with its rivals Swiggy and Uber Eats. Zomato has denied the speculations time and again.  According to a recent report by TechCrunch, Zomato is in advanced stages of discussions to acquire Uber’s India food delivery business, at a valuation of about $400 million. The ride hailing giant is likely to invest between $150 -$200 million in the merged entity to take a sizable share in the company.

Swiggy, which is valued at more than $3 billion, raised $1 billion from a consortium of investors led by South African conglomerate Naspers In December 2018.

Meanwhile, the Indian arm of Seattle-based ecommerce giant Amazon is planning to enter the food delivery segment in India. According to a Reuters report in July, the retail giant is already working with its local partner Catamaran, a private investment firm founded by Infosys’ co-founder Narayana Murthy, and has initiated recruitments.