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Zomato continues investment spree by picking up stakes in AdOnMo and UrbanPiper, announces plans to float an NBFC subsidiary

The food delivery giant has earmarked $1 billion for investments, a sizeable chunk of which is reserved for quick commerce.

Zomato

Zomato* has picked up a stake of 19.48 percent in Adonmo Pvt Ltd. for Rs. 112.29 crores, according to a disclosure filed with the Bombay Stock Exchange. The food delivery platform also acquired a 5 percent stake in UrbanPiper Technology Private Limited for a total of Rs. 37.39 crores, the filing added.

AdOnMo is an ad-tech company that is taking targeted digital advertising beyond personal devices to outdoor digital screens, as per Zomato.

“Growth in AdOnMo’s platform will help our food ordering and delivery business leverage new digital avenues for customer acquisition,” the company said.

Zomato also revealed that Deepinder Goyal, MD & CEO of Zomato, has an investment of $100,000 in Bace Fund LP, which picked up 13 percent in AdOnMo back in December 2019. Zomato clarified that it constitutes an insignificant portion of the fund and that the proposed investment is not a related-party transaction.

It described UrbanPiper as a B2B software platform that acts like a “middle layer” between restaurants and food ordering and delivery players.

Zomato, which also catalogues restaurants, has been on an acquisition spree recently as it tries to augment its growth in India. The company is one of the few start-ups to boast of a successful listing on the bourses but it has also invited public scrutiny of its financials, raising concerns about growth and profitability.

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Zomato will be floating an NBFC

“This is to further inform the exchange that the Board in its meeting held today also approved incorporation of wholly-owned subsidiary of the Company as Non-Banking Finance Company,” read the filing.

The company has not revealed any details about the entity and its function but Economic Times reported that Zomato was in the process of obtaining the NBFC licence. The subsidiary will provide loans to its restaurant partners, ET added.

The company also informed the exchange that the name is being finalised and is awaiting approval from the Ministry of Corporate Affairs. The proposed authorised capital of the entity will be Rs. 10,00,00,000, as per the filing.

The low-down on Zomato’s investments

Zomato has been looking for ways to improve its finances ever since it went public. It shut down a host of international subsidiaries to clean up its books. It is betting on start-ups which can help it gain a foothold in the quick commerce space. The company has earmarked $1 billion for investment in the next couple of years.

Here’s a list of some of its investments:

Grofers: Zomato is hoping to reap benefits from the quick commerce (delivery of products in less than 30 minutes) category as it believes it to be “one of the most promising ones”. The company has invested $100 million in Grofers. Zomato decided against building the category once it experimented with its grocery business and shut it down following setbacks. “We are likely to invest more in this space in the near term,” Deepinder Goyal said at the time.

Curefit: The food delivery platform invested $100 million in fitness firm Curefit, acquiring a stake of 6.4 percent. The plan is to sell Fitso, its subsidiary, for $50 million and the rest will be done in cash. With this investment, Curefit became a unicorn in 2021 with a valuation of $1.5 billion, according to Livemint.

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Shiprocket: The company spent $75 million for an eight percent stake in Bigfoot Retail Solutions Pvt Ltd, the company behind Shiprocket. Goyal described Shiprocket as a B2B logistics-tech company that enables online commerce by providing shipping and fulfillment services to direct-to-consumer (D2C) brands and omni-channel sellers. “We are choosing to back a platform play for all D2C brands,” read the post.

Magicpin: An investment of $50 million in Samast Technologies Pvt Ltd, the parent company of hyperlocal discovery platform Magicpin, was made for a 16 percent stake. “Magicpin has a network of 170,000+ paying merchants in categories including fashion, food, electronics, grocery, pharma, entertainment across 50 cities in India,” as stated in the post.

Hyperpure: A sum of more than $50 million has been kept aside for Hyperpure, to be used in the next 18-24 months. The company revealed that the revenue in Hyperpure grew by 49% QoQ to Rs 1.1 billion ($15 million) in the quarter which ended on September 30, 2021. Hyperpure is present in 8 cities and supplies to over 12,000 restaurants every month.

*Disclosure: The author was allotted shares in Zomato’s IPO.

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I cover several beats such as crypto, telecom, and OTT at MediaNama. I will be loitering at my local theatre and consuming movies by the dozen when I am off work.

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