It is no secret that UberEats India, owned by the US based ride hailing giant, is desperately on a lookout to search for a new buyer to sell off its loss making business. After its negotiation with Swiggy failed earlier this year, UberEats has now turned towards the other incumbent market leader – Zomato. Several speculations and reports circulating in the media claim that UberEats may invest $100 -200 Mn in Zomato as part of the sellout deal. As part of this deal, this investment will be made in a merged entity of Zomato and UberEats.
People privy to the matter claimed that UberEats’ investment of $100-200 Mn is a part of the larger fundraising round and other investors are also likely to contribute to the round. However, UberEats’ contribution may not go beyond $100-200 Mn, sources added.
UberEats’ is also unlikely to see major spike in its valuation as and when the deal materializes, since its market share and other financial metrics are not all that impressive. Its parent company and ride-hailing major Uber had never made any bones about its Indian food delivery business proving to be a great liability. According to latest projection, Uber expects its Indian food delivery business to show negative growth of Rs 762.5 crore by end of this year.
After a lackluster IPO earlier this year, Investors pressure has been growing on the ride-hailing major to streamline its balance sheet and control its enormous losses. If the deal with Zomato does go through despite all the complexities typically involved in a merger deal then it will be major shot in the arm for the loss making ride-hailing company.
Meanwhile, for Zomato this merger deal will be no less boost-up in its bid to defeat Swiggy in the supremacy battle that has now taken a center stage in India’s foodtech sector. In begin with, Zomato will become the largest player in terms of size and number of orders, dwarfing Swiggy by quite a huge margin. The deal may also help the Gurgaon based company in unlocking the highly lucrative southern market where its presence is still minimal.