Food delivery platform Zomato has raised a fresh Rs 456 crore ($62.44 million) from existing investor Singapore-based Temasek, according to regulatory filings sourced from business intelligence platform Tofler. While the amount may not seem large, every penny counts at a time when the lockdown has hurt business badly and revenues are under pressure.
In this highly competitive space, Zomato so far has raised a little over $900 million while investors have infused close to $1.64 billion into rival Swiggy. Given how tough the business is, analysts reckon less than a handful of players will survive in the long run. HSBC analysts estimate India’s food delivery could be valued at about $30 billion in the long term in a blue-sky scenario. Delivery volumes, they point out, are currently less than 1/20th of volumes in mainland China volumes. Moreover, in terms of marketplace and pure-play delivery, India predominantly remains a delivery market, which has lower margins than the market-place model. In comparison, China’s Meituan derives 35% of its volumes from the market-place channel.
In July, Zomato said it expected business to recover from the coronavirus-led disruption in the next three to six months. It added that the food delivery segment, of the restaurant industry, was clocking about 75-80% of pre-Covid GMV(gross merchandise value). In January, the Gurgaon-based firm had announced a $150-million funding by Antfin Singapore Holding and its affiliates. Shareholder Info Edge had said, in a stock exchange filing, the transaction values Zomato at a pre-money valuation of $3 billion. In its latest IPO filing, the Ant Group said “separately, in 2020, a change in foreign investment regulation in India led to our further evaluation of the timing of our additional investment in Zomato”.
The investment by Temasek could be part of a larger financing round which the company had been planning to raise for some time.