Food delivery platform Zomato has sought the approval of the Competition Commission of India (CCI) to pick up 9.3% stake in e-grocery major Grofers. The document filed with the antitrust body said that the potential relevant markets or segments are highly fragmented with the presence of multiple players, including several unorganised players, who will continue to impose significant competitive constraints.
"The notification form is being filed in relation to the proposed acquisition by Zomato of approximately 9.3% stake in each of Grofers India and HoT along with certain rights in each of the Targets (Proposed Transaction). The Proposed Transaction falls under Section 5(a) of the Competition Act, 2002," it said.
Zomato said in its CCI filing that the two companies overlap in the segment of B2B supply of groceries, household items, general merchandise, personal hygiene products, fruits and vegetables in India. It added that the potential relevant markets are highly segmented and includes unorganised players, and that there will be no impact on the competitive market.
According to Moneycontrol, Zomato and Tiger Global will invest around $120 million at a valuation of over a billion, which will make it a unicorn. Zomato has tried its hand at grocery delivery during the first wave of the pandemic, which was subsequently discontinued.
Food delivery app Zomato, which is working to explore public markets later this year, reached an agreement to invest $100 million in the online grocer. Zomato's investment is part of a broader round, in which others including Tiger Global and SoftBank Vision Fund 2 are expected to chip in some capital.
Zomato, which acquired Uber's Indian food delivery business early last year, has told some of its major investors that it envisions a future where the firm has expanded much beyond the food delivery category, the source said, requesting anonymity as the talks are private.
Grofers has witnessed a sharp surge in its popularity in the past year as several Indian states enforced strict lockdown restrictions to contain the spread of the virus.