Zomato said to be in talks to sell UAE business

India-based food delivery service seeking $200m to $250m for the sale of its Emirates business to Germany-based Delivery Hero, report claims

Zomato entered the UAE market in 2012. Pawan Singh / The National
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India-based food delivery service Zomato is in talks with Germany's Delivery Hero to sell its UAE business, according to a report.

Zomato, which entered the Middle East market through the Emirates in 2012, is seeking about $200 million to $250m for the sale, the The Times of India newspaper reported.

The Indian business, which is facing stiff competition from another Indian food delivery start-up called Swiggy, wants to raise capital by divesting its existing assets.

It is also in talks with its investor Ant Financial – Alibaba’s payment affiliate – to raise another $500m to $1 billion, said the report. Ant Financial owns about 28 per cent stake in Zomato.

The online food-delivery market in the UAE has rocketed in recent years, spurred by a surge in demand for dining at home.

The UAE food and beverage industry was expected to reach close to Dh47.7bn by the end of 2018, while the market size of fast-food restaurants was expected to be more than Dh14.7bn, according to estimates by the business researcher Marmore.

KPMG's UAE Food & Beverage report revealed that six out of 10 consumers use food apps, primarily for orders.

Food delivery is a highly competitive industry in the UAE, which is home to other popular apps including Uber Eats, Deliveroo, Talabat and Careem Now.

The UAE market is important for Zomato as it launched its premium service Zomato Gold in the Emirates in 2017 and tied up with more than 350 restaurants within the first year.

Started in 2012, Zomato now operates in 24 countries and the UAE accounts for nearly 20 per cent of its orders. Market experts say that the average order value is higher in the UAE compared to India.

If the deal goes through, then Delivery Hero will become the market leader in the UAE, according to a report from Inc42, a website covering Indian start-up news.

Recently, Zomato was deluged with complaints from UAE customers left hungry on New Year’s Eve despite paying for their takeaways. However, the company blamed technical problems and high demand for the failure to fulfil some orders.