Uber exits Zomato with a quarter of peak $1.5 bn stake value

 Uber exits Zomato with a quarter of peak $1.5 bn stake value

Global ride-hailing company Uber has exited Zomato Ltd, a little more than two years after selling its Indian food delivery business to the Mumbai-listed company in an all-stock deal.

Uber, which was Zomato’s second-largest shareholder, sold its 7.78% stake in the company via secondary market transactions for Rs 3,088 crore ($390 million).

It had sold Uber Eats to Zomato in January 2020 through a stock deal that gave it nearly 10% stake in the company then. The deal had valued Zomato at just under $2 billion then, in effect valuing Uber Eats at about $200 million.

Uber has now exited Zomato with 2.24x its original deal value in 2.5 years. In dollar terms, the return is a shade under 2x given the sharp depreciation of the Indian currency against the greenback since then.

That said, Uber’s stake in Zomato was once valued at around $1.5 billion. Zomato’s share price had rocketed soon after listing, touching a peak last November. It was in line with the Indian stock indices also testing all-time highs in that period.

However, the sharp correction in global tech stocks also had a deep impact on Indian startups, especially in the listed space where recently listed tech ventures saw bulls losing their grip.

As the one-year lock-in for Zomato shares after the IPO last July came to an end it saw another bout of selling pressure testing a low last week. It has bounced back since then, especially after announcing first-quarter results, but is still at a third of the value it once commanded.

For the first quarter ended June 30, Zomato recorded a sharp jump in revenue to Rs 1,414 crore from Rs 844.4 crore in the year-ago period. Its net loss halved to Rs 186 crore in the same period.

Last week, a pre-IPO investor also exited Zomato. However, unlike Uber it signed off with a loss.

Moore Strategic Ventures exited by selling its entire 0.5% stake on the stock exchange. The investment firm had bought the stake from Nexus Venture Partners via a secondary transaction in December 2020 for Rs 190.5 crore. The loss in dollar terms would be marginally higher as the rupee has depreciated since the investment.

Moore Strategic Ventures would be one of the first known institutional investors who backed Zomato before it went public to sign off from the company.

Ahead of the IPO, Zomato had secured Rs 4,196.52 crore from around 130 anchor investors, including many of its existing private equity and venture capital backers. These included Tiger Global, Canada Pension Plan Investment Board, Singapore sovereign wealth fund GIC, and Abu Dhabi Investment Authority.

The company had filed for an IPO in April 2021 to raise as much as Rs 8,250 crore ($1.1 billion then). The IPO plan initially comprised a fresh issue of shares worth Rs 7,500 crore and a sale of shares worth Rs 750 crore by Info Edge, the company behind jobs portal Naukri.com and property classifieds website 99acres.com. However, Info Edge subsequently cut its offer for sale to Rs 375 crore while Zomato increased the size of the fresh offering.

Vivek Sinha

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