Online food delivery aggregator Zomato Ltd will set up a wholly-owned non-banking finance company (NBFC) and invest in two more startups, the company said in a BSE filing on Friday.
The announcement comes at a time when the company has seen a rapid fall in its market capitalisation.
Zomato, whose stock price has fallen more than 35% this month, said it will invest Rs 112.21 crore in AdOnMo Pvt Ltd, an advertising technology company, for a 19.48% stake. The online food aggregator will also pump in Rs 37.39 crore for a 5% stake in UrbanPiper Technology Pvt Ltd.--a software services company. Further, Zomato plans to set up an NBFC with a proposed authorised share capital of Rs 10 crore, the filing reveals.
UrbanPiper is a business-to-business (B2B) software platform that enables restaurants to integrate multiple players through a single digital interface. Zomato said UrbanPiper currently processes approximately 12 million orders a month at over 23,000 restaurant locations in the country. UrbanPiper raised $7.5 million in its Series A round of funding led by Tiger Global Management and Sequoia Capital, in October 2019, VCCircle had reported. As of March 2021, the company had a turnover of Rs 6.34 crore, the filing said.
AdOnMo, on its part, is an advertising tech company that targets digital advertising beyond personal devices to outdoor digital screens, Zomato said. Zomato will leverage AdOnMo’s platform for customer acquisition, the company said. As of March 31, 2021, the company had a turnover of Rs3.27 crore.
“Both UrbanPiper and AdOnMo investments are synergistic to our core business and will help accelerate growth of these companies which will help in filling impo11ant gaps in the food ordering and delivery ecosystem in India,” Zomato said.
On Friday, shares of Zomato ended nearly 1% down at Rs 89.60 a piece on the BSE, against a 0.13% fall in the BSE Sensex, which ended the day at 57,200.23 points.
The two investments and Zomato’s plan to set up an NBFC, come at a time, when many shareholders have raised concerns over profitability of new-age technology companies like Zomato. Consequently, shares of other new-age tech companies including Nykaa, operated by FSN E-Commerce, PB Fintech, parent of Policy Bazaar, and One97 Communications, which operates Paytm have also fallen 15-35%.
Zomato reported a net loss of Rs 430 crore for the quarter ended September 2021, against a net loss of Rs 229 crore in the same period last year. The company’s revenue.
Recently, in an internal communication, the company’s Founder and Chief Executive Officer Deepinder Goyal had told employees he was waiting for a bear market for a long time, as only companies with ‘solid teams and execution’ manage to rise amid a bear market. Goyal had also told employees that Zomato is adequately capitalised and employees do not need to worry about anything except execution.
Zomato has been investing aggressively in many startups, since the company got listed on the stock exchanges in July last year. The company invested in Shiprocket, an ecommerce shipping and enablement platform, in November last year. The company also invested $50 million in Samast Technologies Pvt Ltd., which operates hyperlocal discovery platform magicpin. Further, Zomato had invested $50 million in Curefit, giving it a cumulative shareholding of 6.4% in the company that had valued Curefit at $1.5 billion.
Goyal wrote in a blog in November that Zomato is setting aside a war chest of $1 billion to invest in multiple startups over the next two years.
