SoftBank now in talks to put Zomato on its menu

Japan's Softbank can't seem to get enough of Indian startups; in talks to invest in Zomato

Softbank is eyeing a slice of the Indian food delivery market

The Japanese company had reportedly commenced talks with Swiggy, another food delivery service, late previous year to invest as much as $250 million in the latter's growth, although nothing seems to have come of it yet.

"SoftBank's meeting with Zomato, held earlier this week, is exploratory in nature".

India's food delivery market, which is dominated by Zomato and Swiggy, is growing fast. "One of the points of conversations revolved around Zomato's global expansion over next few years", an unnamed source familiar with the development was quoted as saying by The Economic Times. "Beyond that, we don't comment on market speculation", said a spokesperson for Zomato in response to ET's queries. According to the daily, Uber is expected to invest $200 million into UberEats in India, Ola has earmarked an identical amount to grow FoodPanda, which it acquired last December.

Online food delivery startups are again seeing hyper funding and cut-throat competition, mirroring what had happened in the go-go years of 2014-15. The report added that the discussions are at a "very preliminary stage".

According to RedSeer consulting, foodtech sector saw a 125% increase in order volumes to reach 4.5 lakh orders per day, which is more than double the numbers it saw in 2016. Coatue Management declined to comment.

Japan's SoftBank Group and China's Alibaba are mulling investments in restaurant search and food delivery firm Zomato, a media report said.

Importantly, the company has been achieving the growth on the back of an increased number of deliveries and subscription services including Zomato Gold and Treats.

After invested over $6B in Indian companies like Flipkart ($2.5B), Paytm ($1.4B), Ola ($2B) & OYO ($250M) with in the past 1 year, Softbank also has held early discussions to invest more in Paytm Mall and is also eyeing to fuel PolicyBazaar with almost $200M (Rs 1300 Cr).

Ant Financial Services Group, Alibaba's payment affiliate, on 1 March, also bought $50 million worth of Zomato shares in secondary purchases as part of the aforementioned transaction. This comes just three-odd months after it raised $100 million in its Series F funding from Naspers and Meituan-Dianping, the world's largest on-demand delivery platform.

While valuation differences and business alignment have made the merger conversations rather turbulent, people aware of the developments maintain a possible merger has not been completely ruled out yet. Given the size of the pie, competition was sure to heat up - and it has, to the point that it's nearly a throwback to the red-hot days of 2014-15, when food tech startups were proliferating and raking in moolah. Zomato, last year, bought RoadRunnr, which became Runnr, in its attempt to take on Swiggy with its own delivery fleet.

Investors also point to the early frenzy in the e-commerce market where a capital rush followed companies like Flipkart even as they burnt significant cash on every single order.

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