Zomato's Farewell to UAE Biz

Zomato's sale of its UAE operations to Naspers-backed Delivery Hero will bring some alterations in the Indian food-tech space

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The war between India’s strongest and arch-rival food unicorns Zomato and Swiggy will see another turn because reports have confirmed that Zomato is all set to sell its UAE business to German food tech giant, Delivery Hero. Apparently, this deal is supposed to be closed at $172 million through its fully owned subsidiary Talabat Middle East Services Company LLC.

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This comes as market-altering news that will definitely see a host of changes in the Indian food tech space. According to reports, the acquisition will add 1.2 million monthly orders and $2 million monthly revenue to Delivery Hero's Middle East and North Africa business.

Strengthen Zomato’s Position in the Food Tech Space

Having the backing of the Berlin-based, food tech giant Delivery Hero, will definitely strengthen the position of Zomato in India as well as international food tech industry. This step is very strategic and can prove fruitful if Zomato’s market position strengthens which seems very probable in this situation. Post the closure of this deal, InfoEdge, an online services firm and Zomato’s second largest stakeholder will apparently own 26.38 per cent stake in the company. Apart from the German investor, Zomato has Ant Financial, Sequoia Capital India, Shunwei Capital in the list of its existing investors who have invested in the past.   

This is not the first time that an alliance between Delivery Hero and Zomato has taken place. Recently, both these food enterprises were in the news when the former invested $105 million in the latter.

It’s a Head on Battle Now  

Delivery Hero which is also backed by Naspers is one of the biggest investors in Zomato’s rival Swiggy. It is only after Nasper’s investment in Swiggy in September last year that made the food-tech platform a unicorn. In fact, Nasper’s intention to occupy the Indian food-tech market has come in the second time with Delivery Hero’s partnership with Zomato.

Ever since fortunes of  Swiggy took off, Zomato has been pulling all strings to not be left behind and establish supremacy in the food-tech space. Moreover, now, that it has the backing of Delivery Hero, the battle is going to get tougher and more interesting. Zomato’s efforts to wage a solid battle against Swiggy have been seeing success and their financial numbers are a testimony to it. From entering into the events space with Zomaland to bagging staggering funding amounts, reporting INR 650 crore as profit last year and reducing losses considerably, Zomato’s efforts to give a fitting fight to Swiggy is proving successful.  

While the recent deal seems like a win-win for Zomato, Swiggy is definitely gearing up to respond to the latest developments. Last year saw aggressive growth from both sides. This year, shall not be any less.