Zomato has a new challenge on its hands. (Photo: Zomato)

Zomato To Sell U.A.E. Food Delivery Business For $172 Million

Online restaurant guide and food ordering firm Zomato Media Pvt. Ltd. will sell its U.A.E. food delivery business to Germany-headquartered Delivery Hero Group for about $172 million, one of Zomato's largest shareholders Info Edge (India) Ltd. said.

The Gurugram-based firm has also raised around $105 million in the ongoing round of funding, Info Edge said in a filing on the BSE.

"As a result, upon closing, our shareholding in Zomato will be 26.38 percent on a fully converted and diluted basis," it added.

As part of the transaction, Zomato has entered into an agreement to sell its U.A.E. food delivery business to Delivery Hero Group through its fully-owned subsidiary Talabat Middle East Services Company LLC.

"Zomato and Delivery Hero will enter into services agreements (on the) basis (of) which Zomato will continue to run the said business on its own platform," it added.

Zomato continues to own and run its other businesses such as Ad Sales and Gold in the country, Info Edge added.

In a separate statement, Delivery Hero Group said it would participate in Zomato's latest funding round by investing $50 million into Zomato's global business to become a top 10 shareholder and also enter into a material operational partnership agreement.

"Zomato has built a successful food delivery business in the U.A.E. and India on the back of its restaurant search and discovery app and website. The acquisition will allow us to further improve our service to customers in the U.A.E.," Delivery Hero Chief Executive officer Niklas Ostberg said.

(Looking) forward to learning from their (Delivery Hero’s) global experience to help us strengthen our fast growing India food delivery business.
Deepinder Goyal, Chief Executive Officer, Zomato

In the regulatory filing, Info Edge further said, "In addition, Zomato has concluded its ongoing funding round with an additional second tranche of about $105 million." The new investors in this round include Delivery Hero and Glade Brook Capital, it added.

"Including the $210 million fund raise intimated in October 2018, the total amount of equity capital raised in this round of financing amounts to about $315 million," Info Edge said.

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