INDIA – Uber India is set to sell its two-year-old online food delivery business, UberEats India and is eyeing major players in the sector Zomato and Swiggy as it seeks to cut down losses in the country ahead of its planned IPO.
According to ET Retail, Uber is in talks with the two online food delivery rivals for the deal which will be structured as a share-swap deal- with Uber taking share in buyers for the agreed, upon valuation.
“Swiggy is currently leading the discussions but Zomato is in contention as well,” said one of the sources familiar with the development.
With a gross sales run-rate of US$200-250 million and a currently doing 150,000 to 250,000 deliveries a day, UberEats’ India business positions either of the delivery firms competing for market leadership in the space at a better market position.
This makes UberEats a contender for a distant third spot in the market, ahead of rival ride-hailing company Ola-owned Foodpanda.
“The UberEats India business may get valued at two to three times their gross sales,” said one of the sources mentioned earlier.
This has been estimated to be more than US$500 million, with the transaction aimed to help Uber cut down loss from the India business as it heads for a public offering.
Uber, which has already made a confidential filing with US regulators for an IPO, reported loss of US$1.8 billion for 2018 with India being one of the markets the firm is struggling in to stay afloat.
A deeper analysis on its financial performance reveals that UberEats was losing US$15-20 million a month in India late last year despite selling off its operations in China, Russia and Southeast Asia to rivals.
However, there still lies a potential consolidation with Ola, as both companies share SoftBank as the largest shareholder, which has however raised eyebrows following
According to a report by RedSeer FoodTech Leadership Index (FLI), Swiggy ranks at the 1st place with a total score of 96 in the fourth quarter of 2018 while its arch-rival Zomato coming second with a score of 82.
UberEats was ranked third despite the firm saying that India is one of its fastest growing markets