Zomato, the food delivery app is in talks with Grofers to invest around $100 Million in the e-grocery platform. This investment comes after the discussions of a possible merger fell through last year, with the onset of the Covid-19 pandemic.
Zomato’s investment is likely part of a larger financing round and can push up the valuation of the Gurugram-based e-grocery platform to around $1 billion. This time around the talks were centred around capital infusion, very much unlike 2020 when Zomato was looking to acquire Grofers entirely in an all-stock deal. This acquisition would have been in line with Zomato’s food business.
Grofers was looking to list itself on the US based Nasdaq through a Cantor Fitzgerald blank check firm. However, it is now speculated that they will scrap the IPO plan and continue to remain privately owned. The largest shareholder in Grofers with an about 50% stake continues to be SoftBank Vision Fund (SVF), which was earlier steering the conversation around its initial public offering via a Special Purpose Acquisition Company (SPAC).
Zomato’s investment in Grofers comes at a time when SoftBank is looking to deploy $450 million in Swiggy, its chief rival. Swiggy has been pushing “Instamart”, its quick grocery delivery service, and “Supr Daily”, an essentials delivery platform in an attempt to diversify from restaurant to home delivery. Zomato experimented with grocery delivery during the initial months of the lockdown under “Zomato Market”, it however discontinued its services saying it was not core to its original business model.
Recently, Zomato filed its IPO prospectus with SEBI, looking to raise over $1 billion through a combination of sale of existing shares and fresh equity.
Categories: Corporate M&A