The grocery delivery app has become popular in recent months due to the COVID-19 pandemic and subsequent lockdowns.
Zomato is looking to acquire a 9.3 percent stake in online grocery delivery platform Grofers, a filing with the Competition Commission of India (CCI) revealed.
In seeking CCI’s approval for the deal, Zomato and Grofers submitted that the “proposed transaction will have no impact on the competitive landscape in any potential relevant market in India, in any manner” and that the concerned markets are “are highly fragmented with the presence of multiple players, including several unorganised players, who will continue to impose significant competitive constraints.”
Zomato will invest around $100 million in Grofers as part of a larger funding round that values the grocery start-up at over one billion dollars, The Economics Times reported. Last year, the two firms were looking at a merger, but the deal did not materialise.
Zomato was founded in 2008 as a restaurant discovery website and is now one of the main players in the food delivery market. The company filed its draft red herring prospectus with SEBI in April and is expected to launch its initial public offering (IPO) very soon. Following the IPO, Zomato is looking to acquire a majority stake in Grofers, ETNow reported.
Zomato is looking to acquire a 9.3 percent stake in Grofers India Private Limited and Hands on Trades Private Limited (HoT), both of which are owned by Grofers International. Grofers, which was founded in 2013, witnessed a sharp surge in its popularity in recent months due to the pandemic lockdowns. Hands on Trades is engaged in business-to-business wholesale trading and contract manufacturing of food products and groceries. Zomato tried its hand in grocery delivery last year and even partnered with Grofers for the same, but closed down the service within a few months after its launch.
Big Basket, Grofer’s biggest rival, was acquired by Tata Digital in April. Meanwhile, Zomato’s arch-rival Swiggy is also expanding its grocery delivery service Instamart in an attempt to diversify and tap into growing markets. Amazon, Flipkart, and up-and-coming JioMart are some of the other key competitors in the online grocery delivery space.