India-based foodtech major Zomato is reportedly in talks with German-based Delivery Hero to to sell its UAE-based business.
UAE was the first market outside India that Zomato launched its food delivery business. The UAE accounts for about 20 percent of Zomato’s overall food delivery business.
“Zomato is in advanced stage of talks with the Berlin-based Delivery Hero to sell its UAE business and is seeking $200-$250 million for the sale,” Times of India reported, quoting unnamed sources.
Arabian Business has reached out to Zomato and Delivery Hero for comment.
The UAE business sell of plan is said to be part of Zomato’s efforts to raise $500m to $1 billion in fresh funds to shore up its capital to take on its rivals such as Swiggy.
According to industry sources, Zomato is in talks with new investors to raise additional funds.
The UAE business has been generating higher average order value than that in India, and is therefore expected to fetch a good valuation in the event of divestment.
Founded in 2011, Delivery Hero has presence in about 40 countries across Europe, Asia, Latin America and the Middle East, working with over 200,000 restaurant partners.
Delivery Hero first entered the Middle East market in 2015 with the takeover of Talabat.com.
Deepinder Goyal and Pankaj Chaddah co-promoted Zomato, making a late entry into the food ordering business in 2015, after remaining a restaurant discovery platform for some years, and quickly scaled up, entering countries such as UAE, Philippines and South Africa.
With its rivals in India such as Swiggy, Foodpanda and TinyOwl raising significant amount of funding to aggressively expand their operations, both within and outside India, Zomato is also aggressively looking for fresh capital to fund its growth plans.
“Competition in the food ordering and delivery segment is so aggressive of late, with companies signing up thousands of restaurant partners in India in a short span of 10-14 days,” M R Rajaram, a leading independent business and financial consultant, told Arabian Business.
"It takes only two legs to walk up to a restaurant owner in any locality in India, spend 5 minutes explaining about their business network, to sign up a new partner.”
Ant Financial Services Group, an affiliate company of the China-based Alibaba group, holds about 28 percent stake in Zomato.
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