Zomato acquires India business of Uber Eats

Zomato's acquisition of Uber Eats comes hot on the heels of the company receiving a $150 million equity injection from China's Ant Financial. Uber will get a 9.99% stake in Zomato - valuing the business at $300 million - in return for full ownership of its food delivery operation, according to an announcement. Uber Eats will continue to run independently in Bangladesh and Sri Lanka.

The company was launched in May 2017 as a division of Uber's India-based ride-hailing subsidiary. It was operational in 44 cities. However, the company has struggled to gain a foothold in a fiercely competitive market. Other foreign casualties include Germany’s Delivery Hero, which sold the Foodpanda brand in India to Ola in 2017. Last year, Ola shuttered the food delivery business.

The manner of Uber’s exit from the Indian food delivery segment bears similarities to the fate of its ride-hailing businesses elsewhere in Asia. Didi Chuxing assumed ownership of Uber China in 2016, while Grab did the same in Southeast Asia two years later. In each case, Uber took a minority stake in its erstwhile rival. There has been no change in the ownership or structure of Uber's India ride-sharing business.

Swiggy remains Zomato’s main rival in the food delivery space. The company most recently raised $1 billion in Series H funding led by Naspers in late 2018. It is backed by the likes of Tencent Holdings, Meituan-Dianping and DST Global.

“We have acquired Uber Eats India and with this development, we are the undisputed market leaders in the food delivery category in India,” said Zomato CEO Deepinder Goyal. “The competition in this space is going to continue to be intense, and the food delivery category is still very small compared to the overall food service market in India.”

Zomato earns revenue via commissions on orders, membership programs, delivery of fresh ingredients to restaurants, advertisements, cloud kitchens, and sales of branded food products. Gaurav Gupta, Zomato's COO, told the Financial Times last week that the company hopes to be profitable by the end of the year.

Existing investors in Zomato include Vy Capital, Singapore’s Temasek Holdings, Shunwei Capital and Sequoia Capital India, according to AVCJ Research. Goyal had said at a recent industry forum that the company plans to raise up to $600 million in the coming weeks.

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• Topics
• South Asia
• Technology
• Consumer
• India
• M&A
• TMT
• Ant Financial