Bengaluru-based Swiggy and Gurugram-based Zomato, locked in a fierce battle for dominance in the country’s food ordering and delivery services market, are now bidding for Uber Eats’ local operations, said multiple media reports, citing anonymous sources. While a report by The Economic Times said that talks between Swiggy and Uber Eats were at the final stages, a Times of India report said that Zomato is also in play for the deal.
Email queries sent to Swiggy and Uber Eats did not elicit responses at the time of publishing this report. A Zomato spokesperson said that the company doesn’t comment on speculation.
Uber Eats is the food delivery arm of San Francisco-based ride-hailing company Uber. The proposed share swap, the reports said, would see Uber acquire a stake in Swiggy at an agreed upon valuation.
The ride-hailing company is looking to close the deal ahead of its initial public offering (IPO), the reports added. In December 2018, it had confidentially filed for an IPO that could materialise as early as the second quarter of this year. The deal, if it goes through, may value Uber Eats India at two to three times its gross sales, the Times of India report said. Uber Eats India currently makes 150,000-250,000 deliveries a day with a gross sales run rate of $200-250 million, said the report.
OYO wants to buy FreshMenu
Separately, Bengaluru budget hospitality chain OYO is also in advanced discussions to buy cloud kitchen FreshMenu, multiple media reports said.
Again, the deal is likely to involve a share swap that would see Bengaluru-based FreshMenu’s investors, Lightspeed Venture Partners and Growth Story, and founders receive a stake in OYO, said a report in The Economic Times. The deal may also involve a secondary sale of shares by Zodius Capital, another investor in FreshMenu. The value of the acquisition is pegged at $30-40 million, the report said, citing anonymous sources.
An OYO spokesperson said the company doesn’t comment on speculation. FreshMenu didn’t respond to email queries from TechCircle at the time of publishing this report.
FreshMenu operates as a single-brand cloud kitchen while other standalone cloud kitchen players, Faasos, Innerchef, and Box8, have embraced the multiple brands strategy in a bid to scale their businesses. The Bengaluru-based company sells through its web portal and mobile app and a significant chunk of its business comes from third-party delivery platforms such as Swiggy, Zomato and Uber Eats. The company is believed to be doing 15,000-20,000 orders daily across four cities – Bengaluru, Mumbai, New Delhi and Gurugram.
The company has been in the market for a large funding round for a while. In January this year, it raised about $3 million from its existing investors. By TechCircle’s estimates, it raised the fresh capital at a valuation of $48 million.
A Mint report said that following the proposed acquisition, OYO will expand FreshMenu to more cities under its own brand.
Last week, OYO closed its $1 billion investment round with the last tranche of $100 million coming from Chinese ride-hailing firm Didi Chuxing. Run by Oravel Stays Pvt. Ltd, OYO has been on an expansion spree and is currently present in 500 cities across eight countries. It operates over 13,000 franchised or leased hotels and over 6,000 homes as part of its chain. In India, OYO is present in over 180 cities with more than 8,700 properties.
Swiggy, Zomato flush with funds
The buying spree by Swiggy and Zomato doesn’t come as a surprise given that both companies are currently flush with funds and high on investor radars, both foreign and local.
Swiggy raised a massive $1 billion last December from South African internet and media conglomerate Naspers, China’s Tencent and other investors. Swiggy’s other backers include venture capital firms SAIF Partners and Accel. After the latest capital infusion, Swiggy’s valuation skyrocketed to $3.3 billion.
Meanwhile, Zomato raised Rs 284.4 crore ($40 million) earlier this month from US-based private equity firm Glade Brook Capital. TechCircle had earlier reported that Zomato was looking to score $1 billion in a fresh funding round that would likely be led by existing investor Ant Financial. The company is also reportedly in advanced talks to sell its UAE business to Delivery Hero for $200-250 million in a bid to shore up additional capital.
Both Swiggy and Zomato posted net sales in the region of Rs 450 crore in the financial year 2017-18. For Swiggy, this was more than triple the number compared to the previous financial year as it caught up with Zomato.