Zomato in talks with SoftBank to raise $200-250 Million

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After exploring a deal with Swiggy, it has held a discussion with Zomato to invest about $200-400 million. The homegrown ride-hailing company said it was earmarking $200 million to grow Foodpanda.

That's great news for the consumers because it means that more discounts and promotions are on the cards.

After a not so good show in 2016, previous year India's online food tech sector made a surprising turnaround after Swiggy and Zomato displayed highly improved performance.

Notably, the food delivery segment in India is heating up with new players like UberEats, Ola's acquisition, for which Ola has committed to invest additional $200 million, to get the slice of food delivery business in India. According to The Economic Times, the Japanese conglomerate held an exploratory discussion with Zomato earlier this week regarding a possible investment. In an earlier interview with TOI, Bhavik Rathod, head of UberEats India, said, "India remains one of the most important markets for UberEats globally and is the fastest growing market in the Asia-Pacific region". TOI has learnt the financing round will peg Zomato's valuation at $1.5 billion. This comes barely days after the news that claimed that SoftBank is among the front-runner to invest nearly the amount in Zomato's main rival Swiggy.

It was reported in November 2017 that SoftBank was in talks to invest almost $250 million Swiggy, but no announcement followed yet.

The decision of Alibaba to double its investment in Zomato comes right after the Alibaba group bought out China's food delivery service Ele.me.

In the case of Zomato, while talks are still in preliminary stages, SoftBank reportedly discussed business metrics across Zomato's three main businesses and more specifically around Zomato's global expansion.

According to the sources tracking the sector, Swiggy is now the largest online food delivery app with about 10 million orders per month while Zomato is clocking approximately 7.5 million orders monthly. At present, it does over 5.5 million deliveries every month. Latest numbers for Foodpanda were 40,000 monthly orders, while UberEats was at 20,000-25,000. "Swiggy and Zomato have been scaling very quickly as they are witnessing higher frequency and return customers". Bengaluru-based Swiggy is expected to launch deliveries of grocery and medicine soon in its attempt to draw better margins. Over the past couple of years, the food-tech space in India is on a rise. They scooped up funds in the first few month of being operational. While Ola, with its recently bought Foodpanda, has already anticipating a substantial growth of its food delivery business in line with other players by committing $200 million in it. While TinyOwl was merged with hyper logistics startup, RoadRunnr, Swiggy went on to execute and take the lead in the delivery segment. Going forward, it would be interesting to observe - whether SoftBank will choose Swiggy or Zomato.