Food delivery and restaurant aggregator, Zomato, is in talks with Germany-based Delivery Hero to sell its business in the UAE as it aims to raise capital to fuel its expansion in its home market of India.
According to sources quoted by local daily, Times Of India, the Gurugram-based company is aiming to raise between $200-$250 million cash by divesting its stake.
If the deal goes through, Delivery Hero’s Talabat could have the lead in the UAE’s food delivery market, which some estimate at around $350 million. The food app delivery market is dominated by home-grown Talabat, Zomato, Deliveroo and Uber Eats. New players like Careem Food have joined the market.
There is no official confirmation from either Zomato or Delivery Hero regarding the deal.
Despite the growing competition, Zomato’s UAE operations have remained far profitable with the average order value higher than its home market in India. Its latest effort to divest comes as it faces a cash crunch to keep its pace with its rival Swiggy in India.
Earlier today, Zomato raised a fresh round of $40 million funding from US-based Glade Brook Capital Partners. The latest round values the company at $2.8 billion, according to reports.
Last year it raised $200 million and $210 million from Ant Financial and Alipay. But the food delivery giant said in January this year that it is looking for funding between $500 million and $1 billion too keep up with the pace of its expansion. It confirmed that talks were ongoing with Chinese firm Primavera Capital and its existing investor Ant Financial.
Ant Financial, an affiliate of Chinese giant Alibaba, currently holds 28% of Zomato’s stake. Founded in 2008 by Deepinder Goyal and Pankaj Chaddah, Zomato has operations in 24 countries.