Food delivery app Zomato is in talks to invest around $100 million (Rs 736 crore) in Grofers, two people told ET, after discussions of a possible merger between the two fell through last year at the onset of the Covid-19 pandemic. Zomato’s investment is likely part of a larger financing round and may value the Gurugram-based online grocery firm at around $1 billion, sources said. This time the talks have centered around a capital infusion, unlike last year when Zomato would have likely acquired Grofers in an all-stock deal.
“Zomato has ambitions in the grocery segment and wants to partner with a specialty grocery company rather than build something of its own. They want to stay focussed on the food business,” a person privy to the deal details said on the condition of anonymity as the talks are private.
Zomato’s investment in Grofers comes at a time when Softbank Vision Fund is close to deploying $450 million in rival Swiggy, largely to help the restaurant aggregator expand its services beyond food delivery. Swiggy has been pushing its quick grocery delivery service Instamart and daily essentials delivery platform Supr Daily in an attempt to diversify.
Also, Read This: SoftBank Is Expected To Invest USD 450 million In Swiggy
The development also comes on the heels of Tata Digital receiving a nod from the competition watchdog to acquire a majority stake in Grofers largest rival Bigbasket for about $1 billion.
Zomato, which experimented with grocery delivery during the initial months of the pandemic, discontinued its services under Zomato Market saying it was not cored to its business. “We did grocery because the food delivery business was gone during the lockdown. For 3-6 months, it worked really well and helped us get through the crisis. Eventually, it didn’t make sense,” Deepinder Goyal, co-founder, and CEO of Zomato, told ET in an interview in March this year.
In FY2020, Grofers revenue from operations grew by 78.5% to reach US$310.9 million from US$174.2 million the year prior, according to the company’s filings with the Accounting and Corporate Regulatory Authority. Also, it is witnessing a year-on-year growth of about 110 percent. Grofers has also recently said that it is currently at a run rate of $1 billion in annual gross merchandise value (GMV).
