MUMBAI (NewsRise) -- Food delivery company Zomato Media has received $150 million from Alibaba Group Holding-backed Ant Financial, ahead of a larger round of funding set to be finalized in the next two months.
"We have raised $150 million from Ant Financial as a part of a larger round," a spokeswoman for Zomato said Friday. "Ant Financial has been a steadfast partner in our journey."
The latest funding from existing investor Ant Financial values Zomato at $3 billion, Info Edge, which backs Zomato, said in a statement to stock exchanges. Info Edge’s stake in Zomato after the deal is likely to be reduced to 25.1% from 28% previously, the company said.
Zomato is still in talks with Ant Financial to finalize a larger round worth $500 million, local media reports said, without citing any source. Zomato is in talks with a number of investors for a larger round of funding, a person familiar with the matter told NewsRise.
The fund infusion comes at a time when Zomato is in talks with Uber Technologies to buy the ride-hailing service's local food delivery arm Uber Eats. The move is likely to help Zomato expand its market share as well penetrate deeper into the Uber Eats' premium customer base in India. The final deal, including the fundraising, is likely to be completed by March, the person said.
India's food delivery market has been hyper competitive, often pushing delivery services to offer aggressive price discounts and attractive promotional incentives. Zomato has so far raised $700 million in addition to the additional funding from Ant Financial.
The company is facing intense competition from rival Swiggy, backed by South Africa's Naspers, and the competitive landscape is set to worsen with the roll out of Amazon's delivery service.
The exit of Uber Eats is likely to consolidate the market, a move that is likely to help Zomato cut losses and reduce its cash burn rate, say analysts.
According to Edelweiss Securities, Zomato and Swiggy are burning 1.2 billion rupees ($17 million) and 1.5 billion rupees each a month, respectively, toward promotions in a bid to gain market share.
Both the companies have been clocking 40 million orders per month, implying Zomato's acquisition of Uber Eats will allow it to leap past Swiggy in terms of market share.
--Dhanya Ann Thoppil