Ola to acquire Foodpanda India; commits investment of $200 million

Uber rival Ola buys Foodpanda to invest $200 million in food delivery marketplace

Ola said it is committing an investment of $200 million for its food delivery business without detailing the timeframe for the deployment of the funds. Ltd has infused $200 million in an all-stock deal after which Foodpanda's India business will be transferred to Ola.

Saurabh Kochhar, who was the CEO of Foodpanda India until recently has chose to move on to pursue other opportunities, the company said, adding that Pranay Jivrajka, Founding Partner at Ola, has been appointed as interim CEO of this business unit. The company had recently announced a tie-up with Zomato to enable food via from its in-car Ola Play platform.

"The partnership with Ola will allow us to further consolidate markets where it strategically makes sense to collaborate with leading local players", Delivery Hero Chief Executive Niklas Ostberg said.

The total investment into the India operations stand at Rs 290 crore, with about Rs 50 crore having been invested by Delivery Hero after it acquired German parent Foodpanda in December 2016, documents from Tofler show.

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The flip-flop came as the food technology sector in India went through a struggle, amidst stiff competition and a funding crunch that saw many companies shutting down or trimming their businesses. Foodpanda India, which was mired in controversies around corporate governance, has about 15,000 restaurants in 100 cities listed on its platform.

The move signifies Ola's interest in the lucrative online food ordering market in India that is expected to grow at a compound annual growth rate of about 60 per cent over the next five years and hit a gross merchandise value (GMV) of $2.5-3.5 billion by 2021.

Earlier a year ago, Ola shut down its Ola Café after it faced tough competition from food delivery majors - Swiggy, Tinyowl and Zomato.

Swiggy is backed by Naspers and raised near-to $100 million this past year, Zomato scaled to reach profitability and expanded into logistics while worldwide giants Uber (UberEats) and Google (Aero) entered the space with initially limited services.

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In last two years, Spoonjoy was bought by Groffers, FlavorLabs and Eatongo were acquired by InnerChef, while TinyOwl merged with Road Runner to form Runner, which was then acquired by market leader Zomato in 2016. FoodPanda was acquired by Delivery Hero from Rocket Internet at the end of previous year with a view to expanding its business into Asia, the Middle East and parts of Eastern Europe where Foodpanda is present.

This will be Ola's second outing in the food delivery space.

Rocket Internet-backed Delivery Hero, which owns Foodpanda globally, will get a minority stake in Ola.

The efforts bore fruit as last month, Foodpanda's India unit said its revenue for the year through March 2017 jumped 64% on year to Rs 62.16 crore while losses narrowed to Rs 44.81 crore from Rs 142.64 crore.

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