Zomato, restaurant discovery and online food ordering platform, is said to be in advanced talks with Alibaba and its payments arm Ant Financial to raise around ₹1,280 ($200 million) in a new funding round.
The development was first reported by Economic Times citing three persons aware of the development. The China-based company could also pick up a majority stake in the company, a move that will value Zomato at around $1.1 billion — earning it the Unicorn tag.
The deal, which is yet to be finalized, is said to be a part of Alibaba’s global play since Zomato has expanded its operations beyond India, and has already established its presence in Southeast Asia and the Middle East. It is currently present in 26 countries around the world. A person aware of the matter said,
There are synergies between the two players in the international markets, especially Southeast Asia where Alibaba is building a strong presence. But the deal is not finalised as there is no term sheet yet.
The investor’s interest in the company could be because Zomato managed to steadily fortify its balance sheet with revenues surging 80 percent to ₹334 crore in FY17. It was also successful in significantly shrinking its annual operating burn by 81 percent to just ₹77 crore in FY17 from the ₹441 crore it lost in FY16.
Zomato last raised about $60 million from Temasek and Vy Capital in September 2015. That funding round had valued the company at about $960 million. This financial year, the company is looking to put equal focus on growing its high-margin advertising business, along with the food-ordering business.
The Info Edge-backed company is competing against the likes of Swiggy, while Uber and Google have also launched food-related operations in the Indian market. Swiggy recently raised $80 million from South Africa-based Naspers.
Zomato claims to have delivered over 3 million monthly orders for the first time in July this year compared to competitor Swiggy’s claims of 4 million monthly orders. Zomato, however, maintains that its average order value is higher than that of Swiggy, resulting in higher gross sales.