Zomato’s existing investor Info Edge has said that the online food delivery and restaurant discovery platform is yet to receive $100 million from the $150 million it raised from existing backer — China’s Ant Financial — in January this year. Additionally, it is being “evaluated” if this capital needs government approval amid curbs on investments from the neighbouring country.
Zomato has been in talks to raise about $500 million since late last year. It has also got interest from both new and existing investors for the fresh round, emphasised Info Edge in an analyst call on Tuesday, as losses have come down.
“The balance amount is yet to come,” said Sanjeev Bikhchandani, executive vice-chairman at Info Edge, when asked if the remaining $100 million has come in and if it will need government approval. “We are still evaluating, but the company has got inbound investor interest from other investors also who don’t need permission.”
An affiliate of Chinese e-commerce giant Alibaba, Ant Financial is the largest investor in Zomato with over 25% stake. The latest development comes at a time when the Indian government said in April that investments from bordering countries will need approval, targeted at blocking potential takeovers from China. With the recent clash at the border between the armed forces, the sentiment against investments from China has become much stronger.
Info Edge had said in a filing earlier that Zomato has raised $150 million from Ant Financial, and filings with the corporate affairs ministry show that $50 million of that amount has been invested. The investment was delayed as the additional capital was expected to come from a ‘unicorn fund’ being set up Ant Financial, said one of the sources briefed on the matter. By the time the fund had been finalised, the government had issued a policy requiring approvals, the details of which are yet to be released.
An emailed query to Zomato spokespersons did not elicit an response till the time of going to the press. Zomato, which acquired Uber’s food delivery business earlier this year, counts firms like Singapore’s state investment firm Temasek as another major investor.
Bikhchandani added that Zomato will focus on food delivery as other investors also see an acceleration in consumer habit of ordering food home with the Covid-19 pandemic, even though business might get hit in the short term.
“There was immediately a substantial hit…As restaurants come back, there has been a bit of a bounce-back, but still below what it was in February. Having said that, burn (losses) is substantially down,” he said. The source mentioned earlier said that Zomato’s monthly losses have now come to $1.5 million and business has now come back to 50-60% of the pre-Covid-19 levels.
Info Edge, which also owns classifieds platforms like job portal Naukri and real estate-focused 99acres, also said that it has got board approval to raise $250 million through a qualified institutional placement. The money from the issue will be used for acquisitions of tech companies in its core focus areas — jobs, real estate, matrimonials and education.
“The funding environment has changed with Chinese investments being constrained. I do believe we will get enough inorganic opportunities to expand, and if we get a good one, we would like to be ready and prepared for it,” said Bikhchandani.
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