The Singapore government’s Temasek Holdings Ltd. is in talks to invest up to $100 million in Zomato, the Indian food delivery service firm, the India Times reported.
Founded in 2009, Zomato describes itself as a provider of restaurant reviews and food delivery for more than 1.5 million restaurants in two dozen countries. Based in Gurgaon, India, it services more than 70 million users monthly.
Temasek has owned a 3 percent stake in the startup since 2015. The potential funding is part of a larger investment round the company has been negotiating since the end of last year, the newspaper reported.
“The round was almost finalized, but the terms of the deal are being renegotiated given the impact of COVID-19 on business operations, India’s investment policies and competitive landscape with Amazon’s launch (of its food delivery business),” the source told the Times. “COVID-19 has hurt both the profitable listing and discovery businesses as well as the food delivery arm (of Zomato).”
Ant Financial, an affiliate of Alibaba Group Holdings, recently invested $50 million (out of an expected $150 million) into Zomato, the Times reported. Hangzhou-headquartered Ant Financial is the largest institutional stakeholder in Zomato, holding a 26 percent stake in the company.
As of January, the startup was valued at $3 billion, contingent on Ant’s commitment.
In April, Zomato raised $5 million from Pacific Horizon Investment Trust, a fund managed by British investment manager Baillie Gifford, as a part of its ongoing round.
Zomato downsized its workforce by 13 percent, or about 500 employees, and cut pay for its remaining workers due to the COVID-19 pandemic.
In May, Zomato was reportedly being investigated by the Competition Commission of India (CCI). The agency was said to be probing Zomato’s recent purchase of Uber Eats India for $206 million, which could be seen as violating the nation’s anti-competitive rules.
The CCI is examining two aspects of the deal to determine whether the acquisition will lead to less competition and whether the two companies should have notified regulators about the transaction.
The report also noted that Zomato’s biggest competitor is Swiggy, which is known as India’s No. 1 food delivery business, according to industry estimates. Last month, Swiggy and Zomato announced plans to deliver alcohol in some cities in an effort to meet the increased demand for liquor during the lockdown.
Temasek told the Times it does not comment on market speculations. Zomato was unavailable for comment.