Food delivery and discovery platform Zomato is in talks to invest nearly $100 million in e-grocer Grofers, according to a report in the Economic Times. This comes after discussions between the two companies of a likely merger failed to materialise last year amid the onset of the coronavirus pandemic.
Sources told ET that the Zomato funding is part of a bigger financing round, which could value the grocery startup at around $1 billion. Unlike last year, where Zomato would have acquired Grofers in an all-stock deal, the talks this time, are focused on a capital infusion, according to the report.
“We are in regular touch with the investor ecosystem and are seeing a lot of inbound interest given grocery is an essential need and a high growth segment. Given the dynamic business environment, there will always be room for speculation, but our team is focused on serving more families,” Grofers said in a response to ET.
The food delivery space is witnessing increased traction with Zomato’s competitor Swiggy reportedly close to finalising an investment from Softbank Vision Fund (SVF) of $450 million. This comes amid attempts by Swiggy to diversify, as part of which it has been promoting its quick grocery delivery service Swiggy Instamart and daily essentials platform Supr Daily.
Zomato had trialled grocery delivery in the first few months of the pandemic under Zomato Market, but stopped its services stating that it was not core to its business. Zomato CEO Deepinder Goyal had said at the time, that they ventured into grocery as the food delivery business had gone down during the lockdown and while it worked well for three to six months, they eventually decided not to continue with it.
On April 28, Zomato had filed its IPO prospectus with the Securities & Exchange Board of India (SEBI), aiming to raise Rs 8,250 crore (around $1.1 billion).