Ant Financial, Alibaba’s payment arm, has secured the rights to become the largest stakeholder in Indian foodtech startup Zomato, replacing Info Edge, as the Chinese payments giant looks to aggressively expand its presence in India.
According to its updated Articles of Association, the agreement is part of Ant Financial’s $200 million investment in the food delivery giant in February, giving the Chinese company a greater say compared to other stakeholders in Zomato’s operations.
According to documents, Ant Financial’s share can be subscribed to by its parent company, Alibaba, a Chinese e-commerce company. Ant Financial also known as Alipay, has the right to subscribe to the shares at “fair price” and in stages. The right is valid for 1-3 years since that investment round’s closure.
Ant Financial has 20-22% stake, while Info Edge, one of Zomato’s earliest backer has about 31%. Zomato co-founders Deepinder Goyal and Pankaj Chhadah, who exited the company together have about 14-15% stake.
It will also have greater say under affirmative rights, which requires Zomato to seek approval on a matter like expansion, along with partnership in strategic areas like payments, online-to-offline (020), and e-commerce.
According to the affirmative rights, Zomato cannot enter a market where the ‘Ant Ecosystem Wallet’ is absent, or exit a market where the ‘Ant Ecosystem Wallet’ is present, without the approval of Ant Financial. The ‘Ant Ecosystem Wallet’ is any electronic wallet or mobile money business operated by a company in which Ant Financial owns at least a 15% stake.
Also, Zomato will have to restructure its operations in Australia, New Zealand and Southeast Asia within 180 days if legal or regulatory issues prevent it from doing business with Ant Financial or its affiliates in those geographies.
In a recent news, Zomato is in talks with Chinese online travel agent Ctrip and other investors to raise $400 million with a valuation of $2 million, as the completion with Swiggy intensifies.