By Alkesh Sharma / The National
Indian food delivery platform seeking $200m to $250m for the sale of its Emirates business to Germany-based food app Delivery Hero, report says.
Indian restaurant search and food delivery platform Zomato is in advanced talks with Germany-based online food delivery service Delivery Hero to sell its UAE business, according to a report.
Zomato, which had entered the Middle East market from the UAE in 2012, is seeking approximately $200 million to $250m for the sale of its Emirates business, India-based daily Times of India reported, citing three sources.
The Indian firm, which is facing a stiff competition from another Indian food delivery start-up Swiggy, is aiming to raise capital through divestment of its existing assets. It is also in talks with its current investor Ant Financial – Alibaba’s payment affiliate – to raise another $500m to $1 billion, according to the report. Currently, Ant financial owns nearly 28 per cent stake in the Zomato’s business.
The online food delivery market in the UAE has rocketed in recent years, spurred on by a surge in demand for fine dining at home.
The UAE food and beverage industry was expected to reach close to Dh47.7bn by the end of 2018, while the market size of fast-food restaurants was expected to be over Dh14.7bn, according to estimates by the business researcher Marmore.
The KPMG UAE Food & Beverage report showed six out of 10 consumers use food apps, primarily for orders.
Food delivery is highly competitive industry in the UAE, which is home to other popular apps including Uber Eats, Deliveroo, Talabat and Careem Now.
The UAE market is important for the Gurugram-headquartered Zomato as it launched its premium service Zomato Gold in the Emirates in 2017 and had more than 350 restaurants within the first year.
Started in 2012, Zomato now operates in 24 countries and the UAE constitutes nearly 20 per cent of its orders. Market experts say that the average order value is higher in the UAE compared to India.
If the deal goes through then Berlin-headquartered Delivery Hero will become the market leader in the UAE, according to a report from Inc42, an online platform that covers Indian start-ups.
Recently Zomato was deluged with complaints from UAE customers left hungry on New Year’s Eve despite paying for their takeaways. However, the company blamed technical problems and high demand for a failure to fulfill some customers’ orders.