This story is from September 10, 2018

China's Ctrip likely to join Zomato's $400m funding

China's Ctrip likely to join Zomato's $400m funding
MUMBAI/BENGALURU: China’s largest travel-booking site Ctrip is in talks to invest in online restaurant discovery and food delivery platform Zomato as part of a financing round, which could go up to $400 million (Rs 2,800 crore), two people in the know of the transaction said. The Nasdaq-listed Ctrip is expected to invest around $100 million into Zomato, valuing the Gurgaon-based firm at $1.8-2 billion, the people said.
Ctrip will be joined by Zomato’s existing backers Ant Financial, an Alibaba affiliate, and a couple of new financial investors, the sources cited earlier said.
Ctrip hasn’t been among the most active Chinese strategics in India, with a sole investment in online travel agency Make-MyTrip. If the deal with Zomato goes through, it will be significant as the first such bet outside of travel services for Ctrip, which has a market capitalisation of over $20 billion.
“The discussions with Ctrip are in the last leg, with only the final amount yet to be decided. It is likely to be around $100 million. While the investment is purely financial, the two companies may explore synergies, which will be more strategic in nature going forward,” a person privy to the discussions said on the condition of anonymity as the deal isn’t official. Another source said the transaction should close in two weeks.
Ctrip, which acquired Scottish travel site Skyscanner for $1.7 billion two years ago, also owns Tours4Fun, travel research site Trip.com and Trip by Skyscanner. It’s ranked among the top four online travel agencies worldwide along with Expedia, TripAdvisor and The Priceline group.
For Zomato, getting one of the biggest strategics in the online travel sector on board will be notable as it attempts to expand and grow aggressively in international markets.
Spokespersons for both Zomato and Ctrip did not respond to TOI’s queries.
In its home market, Zomato is fighting a bitter battle with Swiggy, which is also in talks to rack up new funding at upwards of $2 billion in valuation. Both the players are hotly contesting locally with investor money flowing in abundance over the past year after a couple of years of sober sentiments around the food-delivery business. In fiscal 2018, Zomato had a revenue of $74 million while for the previous fiscal, its revenue was $51 million with a reported loss of $54 million.
Research firm Forrester’s analyst Satish Meena said, “Zomato is still No. 2 behind Swiggy in the food delivery space, but the gap is not wide. These players have almost doubled the payout of delivery boys, which is very critical for fulfilling the last-mile delivery. Their fight is going to get more intense as they look to hit new order volume numbers and raise more cash from investors.” Zomato is estimated to be serving about 15-16 million orders per month while Swiggy is expected to be executing 18-20 million orders. Others like UberEats, Ola's Foodpanda and Freshmenu make up the rest of orders being placed online.
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