According to sources familiar with the matter, the leading restaurant search and discovery service Zomato is actively negotiating a capital raise of up to USD 200 million from Alibaba and Ant Financial. The deal, which has not been finalized yet, could value Zomato at up to USD 1 billion.
Since 2008, Zomato has raised over USD 225 million in funding. It expanded its operations to the Middle East and Southeast Asia. The last fresh capital injection it received was in 2015 when Temasek Holdings and Vy Capital invested USD 60 million. The deal with Zomato is a strategic move by Ant Financial to strengthen its market presence in Southeast Asia and keep following the Chinese tourists. Also, if they ink, Zomato could collaborate more with Paytm whose largest investor is Ant Financial.
The interest of global players in Zomato shows that the food sector is reviving from the struggles a year ago. Earlier this year, the South African media leader Naspers led a USD 80 million funding round in Zomato’s main competitor Swiggy. Uber and Google also penetrated in this market.
Zomato has been trying to balance between scaling up its high-margin advertising business and its food delivery operations. The advertising arm marked a very successful year, reporting a growth by 58% to USD 38 million. On the other hand, the food-ordering business grew 8 times to USD 9 million.
Alibaba’s Jack Ma commented the company was targeting to reach global sales of USD 1 trillion by 2020. A strong international expansion said he was part of the strategy to achieve this. The food delivery businesses were attractive for the payments companies as they had a high frequency. Ali Baba and Ant Financial already invested USD 2 billion in the Chinese food ordering platform Ele.me.