Deal valued Zomato at more than $1.0 billion
Indian restaurant discovery and online meal ordering service Zomato said in March 2018 that it had raised ~$200 million from Alibaba (BABA) affiliate Ant Financial. Ant is the Alibaba financial services unit that the US government blocked from acquiring global money remittance provider MoneyGram (MGI) early this year. The deal valued Zomato at more than $1.0 billion.
Zomato provides services in over 10,000 cities across 24 countries, including the United States and Australia. People use Zomato to search for restaurants and browse menus to decide where they want to eat. Zomato also has a map feature that guides users to the restaurant of their choice.
Ant could tap into Zomato’s network to expand its payment market
Zomato intends to use the funds from Ant to improve its products and technology as part of its efforts to sharpen its competitive edge.
For Alibaba’s Ant, investing in Zomato could help expand the market for its mobile payment service given that Zomato is looking to improve the customer experience by offering more convenient payment options. Ant Financial’s Alipay is the leading mobile payment service in China, according to iResearch China, but it’s under strong competitive pressure from Tencent-backed (TCEHY) services such as Tenpay and WeChat Pay. Walmart (WMT) recently decided to replace Alipay with WeChat Pay as its preferred mobile payment provider in western China.
Alibaba’s appetite for India’s tech industry
Generally, Ant Financial’s investment in Zomato continued to highlight Alibaba’s appetite for India’s technology industry. Alibaba is backing several startups in India, including e-commerce provider Snapdeal. Tencent backs Snapdeal rival Flipkart, and last year it joined forces with eBay (EBAY) and Microsoft (MSFT) to raise $1.4 billion for Flipkart.
Ant Financial brought in $30 million in profits for Alibaba in fiscal 3Q18 (the quarter that ended in December 2017).