Chinese ecommerce major Alibaba seems to be looking at another investment in an Indian firm. Online restaurant discovery firm Zomato is in advanced talks to raise up to $200 million from Alibaba and its payments affiliate Ant Financial or Alipay, reports the Economic Times.
According to the report, Alibaba might pick up a major stake in Zomato post the round and may value the company at $1.1 billion. This might give Zomato entry into the Unicorn league. It will also give Alibaba and Alipay a strong presence globally, as Zomato has a strong presence in Southeast Asia and Middle East as well.
“There are synergies between the two players in the international markets, especially Southeast Asia where Alibaba is building a strong presence. But the deal is not finalised as there is no term sheet yet,” a source told ET.
Zomato last raised $60 million from Temasek and Vy Capital in September 2015. This round valued company at about $960 million.
ET reports that the fact that global players are showing interest in Zomato could mean that the foodtech sector, which has been struggling not only to raise funds but also to keep businesses afloat is finally seeing a turnaround.
Zomato’s rival in the food ordering space Swiggy also raised $80 million from Naspers earlier this year. The space has been seeing traction after Uber launched UberEATS in Mumbai and Bengaluru and Google too, entered this space.
After burning a lot of cash, Zomato has been on a turnaround mission reducing its burn rate and strengthening its balance sheet. It reduced its rate by 81% to Rs 77 crore in FY17. Losses too, narrowed by 34%.
While it has been rapidly growing its food-ordering business to keep up with rivals, it has retained an equal focus on its advertising business, which grew 58% to $38 million in FY17, according to the report.
However, the food ordering space has seen a lot more competition and also happens to be capital intensive. To strengthen itself in this space, Zomato is also in the process of acquiring hyperlocal delivery startup Runnr.
ET reports that the interest of Alibaba-Ant Financial in Zomato comes as the Chinese e-commerce giant is aggressively expanding its presence across the world, especially in markets like Southeast Asia.
This also not Alibaba’s first bet on a food ordering firm. It invested over $2 billion into Chinese food ordering platform Ele.me since 2016.