Zomato has reached an agreement with German-based food tech delivery major Delivery Hero to sell its UAE business for $172 million (Rs 1,220 crore). Zomato has also raised fresh funds from Delivery Hero to officially close its series I round. Barely a few days back, Gurgaon based startup had raised $62.5 Mn (nearly Rs 441 crore) from Delivery Hero and Shunwei Capital as part of the same round.
Overall, the unicorn foodtech company has raised $315 Mn in the series I round. The company’s series I round has been ongoing since October last year.
Zomato’s UAE acquisition will add 1.2-million monthly orders and $2-million monthly revenue to Delivery Hero’s Middle East and North Africa business, according to Niklas Östberg, CEO of Delivery Hero.
Zomato’s other businesses in the UAE such as Ad Sales and Zomato Gold are not part of the acquisition deal. This means the Gurgaon headquartered company will continue to operate these two businesses under its banner.
“The acquisition will allow us to further improve our service to customers in the UAE. We are also excited to become a shareholder in Zomato’s rapid food-delivery growth story in India and share our learnings.” Östberg said.
Zomato’s decision to sell the UAE business will certainly add to its financial muscle as it looks to win the ongoing dogfight against cash rich rival Swiggy. Ever since Swiggy raised whopping $1 Bn in December last year, the Gurgaon based company has been in pressure to beef up its cash coffers.
Zomato, despite being on par with Swiggy in revenue and profit, has been lagging behind in fundraising game. This is clearly reflected in two company’s current market valuation. While the Gurgaon Company is currently valued around $2.2, Swiggy is slightly ahead with almost $3.3 bn valuation.
Zomato offloading the UAE business also reflects the long awaited consolidation phase in the foodtech sector. Last month, debate over consolidation phase in the foodtech sector had gained momentum after reports were abuzz that Uber is likely to sell its Uber Eats India business to Swiggy.
There is indeed some need for rationalization in the foodtech sector as it been witnessing intense competition and hyper fundraising exercise since last year.