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Zomato acquired 9.16% stake in Grofers for INR 518.2 Cr; allotted 3,248 preference shares and 1 equity share to Zomato

Zomato acquired 8.94% stake in Hands on Trades for INR 222.8 Cr; allotted 448361 preference shares and 1 equity share to Zomato

The said investment in Grofers makes it new entrant to the unicorn club

The newly listed online food delivery platform Zomato has acquired 9.16% stake of an online e-grocery firm Grofers India private limited for  INR  518.2 Cr. Grofers allotted  3,248 preference shares and 1 equity share to Zomato. In a filing, Zomato informed the BSE that it has also completed acquisition of Hands on Trades Private Limited (HOTPL), a private company owned by Singapore-based Grofers International Pte Ltd, that is in the business of  B2B wholesale trading. Zomato has acquired an 8.94% stake on a fully diluted basis in Hands on Trades for INR INR 222.8 Cr. It has allotted  448361 preference shares and 1 equity share to Zomato . Overall, Zomato had to shell around INR 740 Cr. 

Earlier on August 13, 2021,  India’s antitrust regulator – Competition Commission of India (CCI) had approved the 9.16% acquisition in Grofers. With this investment, Grofers’s valuation is said to touch $1 Bn and become a new entrant to the celebrated unicorn club.  The deal is expected to bring back Zomato into the ever growing grocery segment that it quit after a brief period of time during the first COVID19 wave last year. Zomato’s rival Swiggy, continues to deliver doorstep delivery to date through Instamart. 

Last year, multiple reports surfaced about Zomato’s acquisition of Grofers. However, with the onset of the pandemic, the deal failed to materialise and Grofers continued to double down on its investment in grocery delivery, which was among few of the services that was allowed during the months-long stringent lockdowns. Grofers is said to have made a $15 Mn investment last year to meet the rise in grocery demand. 

Zomato’s announcement further comes a couple of months after Grofers cofounder Saurabh Kumar quit, but continues to be on the board of the startup. The two IIT grads, Kumar and Dhindsa founded Grofers back in 2013. Grofers offers products across categories such as grocery, fruits and vegetables and operates in more than 27 cities across the country. To date, Grofers has raised around $660Mn (excluding Zomato’s investment) in financing from marquee investors such as Masayoshi Son’s Softbank, New York-based Tiger Global, Sequoia, Trifecta Capital, Bennett Coleman and Co, and others.

The startup to grab further market share after announcing 15 minute deliveries in Gurugram, has now announced 10 minute grocery delivery in 10 cities including Bengaluru, and Hyderabad. The said announcement comes days after Swiggy’s Instamart grocery started grocery delivery in 15-30 minutes. Swiggy has now expanded its Instamart service to Delhi, Mumbai, Chennai, Hyderabad and Noida, besides Bengaluru and Gurugram. 

As per a RedSeer report, the Quick Commerce (Q-Commerce) market in India is expected to reach $5 Bn by 2025 from the current $0.3 Bn. In the segment, Grofers will compete against Dunzo, Swiggy Instamart, among others. In the egrocery segment Grofers locks its horns with Tata Digital backed BigBasket.