Zomato picks up stakes in Adonmo and UrbanPiper; company board approves NBFC incorporation

The company’s board has also approved the incorporation of a non-banking finance company (NBFC), which will be a wholly-owned subsidiary of Zomato. While the name of the subsidiary is still to be decided, Zomato is in process of acquiring the NBFC license. The company will look to provide loans to its restaurant partners, a person aware of Zomato’s plans told ET.

The news comes at a time when the stock has recorded a
steep fall amid a larger rout in new-age tech stocks in India and in the US. On Friday, Zomato’s stock continued on a downward trend dropping to Rs 90.45 apiece from Rs 95.75 at the start of trade. Over the last seven days, Zomato’s stock price has fallen over 24%.

Zomato’s investment spree

The fresh investments by Zomato are a part of its larger strategy to back startups. Last year, the company said it plans to invest $1 billion in Indian startups over the next two years. It had announced investments in fitness platform,
Curefit, hyperlocal discovery business, Magicpin and logistics firm Shiprocket.

Read our interview with
Zomato CEO Deepinder Goyal for more on the company’s investment strategy.

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Adonmo is an ad-tech company that helps in providing targeted digital advertising to outdoor digital screens. Its proprietary technology enables cloud-connected digital screens with contextual and targeted advertising capabilities. According to the regulatory filing, Zomato is picking up 11,214 compulsorily convertible preference shares in the company aggregating to 19.48% stake for a cash consideration of Rs 112.20 crore

Additionally, Zomato is also picking up a 5% stake for Rs 37.38 crore in UrbanPiper Technologies, a business-to-business (B2B) software platform that acts as a middle layer between restaurants and food-delivery players. It says it enables restaurants to integrate with multiple players through a single digital interface. The company currently processes around 12 million orders a month and boasts of a network of over 23,000 restaurant locations in the country.

“Growth in Adonmo’s platform will help our food ordering and delivery business leverage new digital avenues for customer acquisition. With our investment, we hope to fuel UrbanPiper’s penetration in the restaurant industry. Both UrbanPiper and Adonmo investments are synergistic to our core business and will help accelerate growth of these companies which will help in filling impo11ant gaps in the food ordering and delivery ecosystem in India,” said Zomato as a part of its BSE filing.

These transactions are expected to close in another week.

“Pursuant to the approval of the Board, the Company has finalized and executed the relevant agreements for the Proposed Investments. The Proposed Investments are each subject to fulfillment of certain customary conditions precedent and other terms and conditions agreed under the investment agreements,” added Zomato.

As a part of the disclosures, Zomato said that Bace Fund LP, in which Zomato’s Goyal has an investment, also invested in Adonmo in December 2019 as part of its $3 million fundraise. Bace currently holds 13% in Adonmo.

“Deepinder Goyal (MD & CEO of the Company) has an investment of $100,000 in Bace Fund LP, which is an insignificant portion of the fund…Our proposed investment in Adonmo is not a related party transaction and the above disclosure is being made voluntarily,” said Zomato as a part of its disclosures.