Uber Technologies has sold its 7.8% stake in Indian food delivery firm Zomato Ltd for $392 million via a block trade on local exchanges, two sources familiar with the matter told Reuters.
The deal was executed at 50.44 rupees per share, they said. Zomato and Uber did not immediately respond to requests for comment.
Reuters reported on Tuesday 2 August that the offer size of the block deal was set to be 612 million shares, according to its term sheet, which did not disclose the seller.
As per Reuters calculations, the stake sale by Uber was worth 30.87 billion rupees ($392 million).
Uber on Tuesday reported a net loss of $2.6 billion for second quarter of 2022, of which $1.7 billion was related to its equity investments, including its Zomato stake.
Its stake sale comes at a time when Indian startups are struggling to raise fresh capital amid a global market slump and criticism of sky-high valuations, after a blockbuster $35 billion in total fundraisings in 2021.
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BofA Securities was the sole bookrunner for the transaction.
One of the sources said the stake was bought by around 20 global and Indian funds, including Fidelity, Franklin Templeton and India's ICICI Prudential.
Fidelity could not immediately be reached for comment, while Franklin and ICICI declined to comment.
Zomato said on Monday it had recorded more orders and narrowed its loss for the June quarter to 1.86 billion rupees from 3.56 billion a year earlier.
The Indian food delivery company is also considering reorganising its management so its individual businesses would each have a CEO, while the parent company would be renamed "Eternal".
Backed by China's Ant Group, the company made a stellar debut on July 23, 2021 on the Mumbai stock market, but its shares have lost more than 50% of their value since then on concerns about valuations and growth amid turmoil among global growth stocks.
India's Zomato Falls Nearly 7% On Reports Of Uber Stake Sale
The above news followed news that shares of Zomato Ltd fell up to 6.8% on Wednesday 3 August, in their biggest drop in more than a week, a day after reports said that Uber Technologies planned to sell its entire stake in the Indian food delivery firm.
Uber is the likely seller of a 7.8% stake in Zomato being disposed of via a $373 million block deal, a source with direct knowledge of the matter told Reuters.
The offer size of 612 million shares worth $373 million is based on the lower end of a price range of 48 rupees-54 rupees set for the block deal, according to a term sheet seen by Reuters.
Uber and Zomato did not immediately respond to Reuters requests for comment.
BofA Securities is the sole bookrunner for the deal. The term sheet did not name the potential seller.
About 12.1 million shares were exchanged in a block deal priced at 52.5 rupees in pre-open trade, according to Refinitiv Eikon data.
Zomato shares were last down 1.5% at 54.7 rupees, with more than 232 million shares traded, twice their 30-day average.
Uber Likely Seller Of 7.8% Stake In India's Zomato - Source, Term Sheet
All of the above news followed news that Uber Technologies is the likely seller of a 7.8% stake in Indian food delivery firm Zomato being disposed of via a $373 million block deal, according to a source with direct knowledge of the matter.
The offer size of 612 million shares worth $373 million is based on the lower end of a 48-54 rupee price range set for the block deal, a term sheet seen by Reuters stated, adding that would be at a 2.8%-13.6% discount to the latest close.
Zomato and Uber did not immediately respond to a request for comment. Shares in Zomato rose 20% to 55.55 rupees on Tuesday 2 August.
BofA Securities is the sole bookrunner for the deal. The term sheet did not name the potential seller.
On Monday 1 August, Zomato said it had recorded more orders and narrowed its loss for the June quarter to 1.86 billion rupees ($23.67 million) from 3.56 billion rupees a year earlier.
Uber on Tuesday 2 August reported a net loss of $2.6 billion for second quarter of 2022, of which $1.7 billion was related to its equity investments, including its Zomato stake.
India's Zomato On Track For Best Day After Strong Quarter
All of the above news followed news that shares of Indian food delivery firm Zomato Ltd jumped more than 18% on Tuesday 2 August and were set for their best session, a day after the Ant Group-backed company 688688.SS recorded more orders and narrowed its losses in the June quarter.
The Gurugram-based company, which operates in more than 1,000 towns and cities in India, posted a quarterly loss of 1.86 billion rupees ($23.67 million) on Monday, compared with a loss of 3.56 billion rupees last year.
Revenue from operations, which mostly comes from its mainstay food delivery and related fees it charges restaurants for using its platform, rose 67% to 14.14 billion rupees in the three-month period ended 30 June.
Gross order value - or the total value of all food delivery orders placed online on Zomato's platform - rose 41.6%, and the company said its adjusted EBITDA for the food delivery unit broke-even for the quarter.
"We like Zomato for its long runway for growth, steady market share gains, and fast pivot to profitability, despite challenges – slower growth than in the last two years and heavy investments in Quick Commerce, where profitability is not in sight in the near term," Morgan Stanley analysts said.
The brokerage resumed coverage of the stock with an "overweight" rating and price target of 80 rupees.
The stock, which lost nearly 60% from its debut price a year ago, was last up 16.5% at 54 rupees, bouncing from record lows seen last month.
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