Uber Sells Entire Stake In Zomato For Rs 3088 Crore; Earns 2.4X ROI On 7.78% Stake
Uber has sold its minority stake of 7.8% in Zomato for about $392 million in a block trade on Wednesday.
Out of India’s food delivery market
The ride hailing app sold 612.2 million shares, or 7.8% stake in Zomato for Rs 50.44, or about 64 cents a share.
Zomato had reported a reduction in the company’s losses which shrank to Rs 18.6 crore in the quarter ended June 30, 2022 from Rs 35.94 crore in the previous quarter.
The sale marks Uber’s exit from the Indian food-delivery market.
One step among many to come?
It had sold its UberEats unit in the region to Zomato in 2020 in return for a stake in the startup.
Bloomberg Intelligence analyst Mandeep Singh said that offloading the stake “may be a precursor to exiting from more unprofitable delivery markets.”
Speaking of unprofitable delivery markets, rumors have been swirling for a while that with Uber’s bleeding balance sheet in India, it may sell its India operations.
The company strongly denied this reporting.
Balm to Billion-dollar cash burn
The Zomato stake sale should help offset Uber’s $3.1 billion cash burn in that segment since 2018.
It reported a net loss of $2.6 billion due to unrealized losses from stakes in Grab, Aurora Innovation Inc. and Zomato.
It held stakes in companies including Didi Global Inc. and Grab Holdings as a way to maintain presence in markets where competing with local rivals gets costly.
Zomato faring better
Meanwhile Zomato is capitalizing on its recent earnings and acquisitions.
After acquiring Blinkit, the company is now renaming the parent of its operations to Eternal, in a Google/Alphabet-style move.
It has appointed four CEOs to its different businesses: Hyperpure, a B2B restaurant supply firm; Feeding India, a nonprofit; Blinkit; and finally Zomato itself.
A Zomato spokesperson declined to comment.