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CCI approves Zomato’s $100M investment in Grofers India

The Competition Commission of India (CCI) has granted Zomato Ltd’s $100 million investment into online grocery platform Grofers India Pvt. Ltd as well as its wholesale subsidiary Hands-On Trades Pvt. Ltd. The watchdog said in a Twitter post on Friday.

Zomato Grofers Logo

Image Source: Business Today

After finalizing a deal on June 29, Zomato requested clearance from the CCI in the first week of July to acquire a 9.3 percent ownership in the online supermarket and its wholesale division. According to media sources, Zomato’s existing investor Tiger Global Management was also interested to inject another $20 million as part of the investment. Grofers is estimated to be valued at a little over $1 billion in the transaction, as reported earlier, making it one of the most recent participants of India’s unicorn club.

Zomato recently announced that it will recommence grocery delivery services on its platform after halting operations in July 2020. Following a boost in demand within the first wave of the outbreak and the accompanying countrywide lockdown, the company began delivering essentials supplies as well as groceries under the Zomato Market brand.

For reference, Hands-On Trades Pvt. Ltd a subsidiary unit of Grofers, was founded in September of 2015 operates in B2B wholesale commerce with third-party merchants, contract manufacture of food, grocery, and other commodities for wholesale distribution, providing warehousing services, including food and grocery inventory for third-party merchants. According to a notice filed with the commission, Zomato would acquire a 9.3 percent ownership in “each of Grofers India and HoT, as well as certain rights in each of the targets.”

Moreover, Zomato’s prime competitor, Swiggy is trying to expand Instamart, its essentials, and groceries delivery platform, in Bengaluru and Gurugram, after debuting it last year. At a valuation of $5.5 billion, the Bengaluru-based food-tech startup secured $1.25 billion in July from global investors notably Japanese conglomerate SoftBank and Netherlands-based Prosus.

The online grocery market in India is predicted to reach a Gross Market Value (GMV) of $24 billion (approximately Rs. 1,78,900 crores) by 2025, according to consultancy firm RedSeer. For instance, major corporations such as Reliance Industries Ltd (RIL) and the Tata group, for example, are battling for a chunk of India’s booming e-grocery sector.

RIL chairman Mukesh Ambani stated that JioMart reached a record of more than 650,000 orders in a single day, with an 80 percent recurring order rate within a year of its inception in May 2020. Similarly, earlier this year, Tata Sons acquired a 64% ownership stake in BigBasket, India’s largest e-grocer. According to media reports, Tata offered more than $1 billion for the acquisition.

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