Zomato Set to Acquire About 10 Percent Stake in Grofers

Zomato is set to acquire a 9.3 percent stake in online grocery delivery platform Grofers, according to a filing with the Competition Commission of India (CCI). The latest move by the Gurugram-based restaurant aggregator comes just months after Tata Digital acquired a majority stake in Grofers' arch-rival BigBasket. The acquisition has also been planned in the midst of Zomato's ongoing efforts to launch its initial public offering (IPO) in India. The deal between Grofers and Zomato could be aimed to take on the likes of BigBasket and Swiggy.

As per the document filed with CCI, Zomato has sought an approval to acquire the stake in Grofers as well as its holding company Grofers International and wholesale trading company Hands on Trades.

“The parties submit that the potential relevant markets/ segments identified above are highly fragmented with the presence of multiple players, including several unorganised players, who will continue to impose significant competitive constraints. The proposed transaction will have no impact on the competitive landscape in any potential relevant market in India, in any manner,” the filing said.

Zomato declined to comment on the acquisition, while Grofers did not respond to a query about the deal at the time of writing.

The acquisition would help Zomato enter the emerging market of online grocery deliveries in India through Grofers. The company did try to foray into the market on its own last year and launched its grocery delivery service in over 80 cities. However, that service was closed just months after its launch.

Similar to Zomato, rival Swiggy also started its grocery delivery service in the country last year. It had initially tied up with local retailers for deliveries. The company shut down that model but brought its native hyperlocal grocery business called Instamart in August.

According to an estimate by consultation firm RedSeer, the grocery market in India is expected to hit a gross merchandise value (GMV) of $24 billion (roughly Rs. 1,78,900 crores) by 2025.

The growth potential has attracted conglomerate Reliance Industries to establish its JioMart as a competitive platform. Tata Digital also recently invested Rs. 9,500 crores in BigBasket to acquire its majority stake. In addition to traditional players, Amazon and Flipkart are heavily investing to expand and improve their existing grocery delivery models in the country.

Aside from moving into grocery deliveries, Zomato is currently busy preparing for its IPO. The company filed for the offering of up to Rs. 8,250 crores in April and is currently anticipating a nod from the Securities and Exchange Board of India (SEBI).