Months after Uber cut its losses and jumped ship, China’s Alibaba Holding Ltd is also planning to sell its three per cent stake in Indian food delivery aggregator Zomato, according to multiple reports.
The Chinese company will be selling its stake through a block deal expected to take place on Wednesday. Morgan Stanley will be the broker with Alibaba’s shares being offered at a five to six per cent discount.
Through the deal, the Chinese tech giant is anticipating to mop up around $200 million.
In August, Uber, the US-based cab-hailing platform exited Zomato by selling its 7.8 per cent stake via a similar block deal. According to term sheets, the deal stood at around $392 million with shares sold at 50.44 rupees apiece.
What happened with Zomato?
Zomato issued its Initial Public Offering (IPO) last year when its valuation stood at $13.3 billion. Notably, the company’s valuation was only $3.5 billion, a year prior to the IPO and that too after acquiring Uber Eats and its India services.
When the IPO was released, it was 35 times oversubscribed, suggesting that the company had played the right hand.
At the time, the company was listed with an issue price of Rs 76, per stock. Subsequently, the stock price rose to an all-time high of Rs 169.10 in November.
However, that was the last time the company’s stock touched such heights. Since then, the Bengaluru-based company has failed to recreate the same magic as it fails to chart a road towards profitability.
The global economic downturn has added to Zomato’s woes. The company confirmed earlier this month that it will be firing at least three per cent of its workforce across the country based on regular performance.
“There has been a regular performance based churn of under 3 per cent of our workforce, there’s nothing more to it,” said the Zomato spokesperson.
Zomato sustained a net loss of $2.5 billion in the quarter ending September when compared to the previous fiscal year’s loss of $4.3 billion during the same period.
(With inputs from agencies)