As the Indian government seeks to stem the inflow of Chinese money into the country, startups backed by Chinese investors have begun scouting for other financing avenues.
Indian food ordering and delivery platform Zomato Media Pvt Ltd is in talks with Singapore state investment firm Temasek Holdings to raise as much as $100 million after recent changes in India’s foreign direct investment (FDI) rules stalled a previously announced investment by China’s Ant Group. Both Temasek and Ant are existing Zomato investors.
The new FDI rules, which were announced in April, mandate prior government approval for investments by entities based in countries that share a land border with India. The policy aims to curb opportunistic takeovers of domestic firms during the coronavirus pandemic.
According to a report in The Economic Times, Temasek is expected to infuse funds in Zomato as part of a larger investment round that the Gurugram-based company has been negotiating since the end of last year. The round was almost finalised, but the terms of the deal are being renegotiated given the impact of COVID-19 on business operations, the report said.
Temasek, which first invested in Zomato in 2015, has so far pumped in Rs 310 crore into the company and currently holds a 3 per cent stake, the report said quoting Tracxn data.
Zomato had entered into an agreement to raise up to $150 million from existing investor Ant Group, an affiliate of China’s Alibaba Group Holdings, in January this year. So far, the foodtech unicorn has received only $50 million of the total funding amount. Ant Financial is also the largest institutional stakeholder in Zomato with a 26 per cent stake.
The Indian company had also raised $5 million as part of its ongoing Series J financing round from an affiliate of British investment manager Baillie Gifford in April this year. The round had reportedly valued it at about $3.25 billion. Zomato counts Info Edge, Sequoia Capital India, and Vy Capital among its list of backers.
The startup is going through turbulent times with the COVID-19 crisis deepening in India as people continue to remain sceptical about eating out. Zomato has started grocery delivery services across the country to curtail losses.
Meanwhile, India on Monday announced a ban on 59 Chinese apps, including TikTok, UC Browser, and Shareit, citing security concerns. India and China will hold another round of military talks on June 30 as border tensions continue to simmer in Ladakh after a brutal face-off between the armies of the two countries.