Competition between two of India’s major food delivery platforms is heating up. After Swiggy raised US$1 billion from South Africa’s Naspers and China’s Tencent last week, Zomato is reportedly in talks with investors including Alibaba’s Ant Financial for between US$500 million and US$1 billion new funding.
In addition to Ant Financial, which is an existing investor, other potential investors for the new round, according to India’s The Economic Times, include Chinese private equity firm Primavera Capital among others. The report suggests that Ant Financial is a prime candidate for involvement in this new round of investment, and quotes a person with knowledge of the discussions as saying that Ant Financial is Zomato’s “most influential, deep-pocketed investor.”
Primavera is already familiar with the food delivery industry, as the firm has invested in Ant Financial and Alibaba’s food delivery platform Ele.me, which merged with Alibaba’s local commerce unit Koubei in October. Primavera has also made several other co-investments along with Ant Financial in bike-sharing company Hellobike (now called Hello Chuxing or Hello TransTech) and Yum China, which owns or franchises KFC, Taco Bell, and Pizza Hut restaurants in China.
According to Crunchbase, Zomato has raised a total of US$653.8 million over 11 rounds. Last year, the company received US$200 million from Ant Financial in February, followed by US$210 million from Alipay Singapore in October. Zomato was valued at US$2 billion per their last investment.
Zomato is racing to catch up with its rival after Swiggy underwent the largest financing round ever in India’s food tech industry. “Zomato had not anticipated Swiggy to raise $1 billion, it was more on the lines of $600 million in primary money that they thought would come into the firm. This has made them recalibrate their new financing so that they can continue to fight Swiggy,” The Economic Times‘ source said.
Food delivery is a fast-growing sector in India’s e-commerce market. It has attracted billions of dollars in investments in recent years. According to Statista, revenue in the online food delivery segment is expected to reach US$8.1 billion in 2019. Swiggy and Zomato lead this sector in India. The former fulfills at least 25 million orders per month, while the latter handles approximately 21 million orders in the same time frame. Other food delivery platforms in the country include Uber Eats and Food Panda.
As competition between Zomato and Swiggy intensifies, so does the duel between Alibaba and Tencent, which are both entrenching themselves in the Indian subcontinent.
Editor: Brady Ng & Ben Jiang
