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Uber likely to sell off 7.8% stake in India’s Zomato, lost $707M on its investment

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In the second quarter of 2022, Uber lost $245M on its investment in Zomato, while it lost $707M in the first half of the year, the company reported. Now, it has been reported that a significant transaction involving the food delivery aggregator Zomato is likely to occur on August 3, with Uber perhaps selling its 7.8% interest in the latter through the sale.

Nitty gritty of offloading

The offer has a price range of Rs 48–54 per share and is for approximately Rs 2,938 crore, or $373M. The size of the offer will be 612M shares, or 7.8% of the total number of shares now outstanding.

The deal will only have one bookrunner, BofA Securities. The ride-hailing giant acquired a stake in the Indian firm when it sold its local UberEats business to Zomato in early 2021.

Zomato closed at Rs 56 on the BSE on Tuesday, up 20% on the day, after the firm reported a 48 percent decrease in net loss to Rs 186 crore in the June quarter. During the same time period, the company’s food delivery sector broke even.

UberEats to Zomato

Following years of tough competition with local food heavyweights Zomato and Swiggy, Uber sold its food delivery business in India to local rival Zomato for $206M.  Uber purchased a 9.99 percent interest in the loss-making Indian food delivery company as part of the acquisition. 

Zomato shares have performed poorly this year, falling to an all-time low last week following the expiration of the lock-in period for investors who owned holdings in the company prior to the initial public offering.

This comes after Zomato’s stock hit a new low on July 25 when the one-year lock-in period for pre-IPO investors expired. On July 23, the lock-in period for around 613 crore shares expired. On August 2, its shares rose nearly 20% after its consolidated loss virtually halved year on year to Rs 186 crore for the June quarter.

This comes after a report claimed that Uber considered selling its India ride-hailing service, but that conversations were later halted. Uber CEO Dara Khosrowshahi stated that there was “zero veracity” to it and that it was not investigated or evaluated.

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