Chinese payments group Alipay will acquire a 3.4% stake in Indian food delivery giant Zomato for about $400 million in a block deal on the Indian stock exchange, according to three sources and a Reuters review of deal terms. It is said that they plan to sell it for 3.333 trillion rupees.
Alipay, owned by Ant Group, will sell its entire 3.44% stake in the deal, according to a term sheet seen by Reuters.
Bank of America and Morgan Stanley are advisors to the deal, which is expected to be executed on Indian exchanges later this week, said three sources who declined to be named because the plan is private.
Zomato, Bank of America and Morgan Stanley did not immediately respond to requests for comment. Alipay also did not respond outside of regular business hours.
Zomato shares have surged more than 90% this year after falling by more than half in 2022, a year when technology stocks were weak globally.
Alipay “wants to cash in… (the market) timing is good,” the first source said, citing the surge in Zomato’s stock price in recent months.
The block deal is set to run at Rs. The price is $111.28 per share, a 2.2% discount to Tuesday’s closing price, the term sheet shows.
Last October, Japan’s Softbank sold a 1.1% stake in Zomato, India’s largest food delivery service. Demand for online ordering has grown rapidly in recent years, leading companies like Zomato to expand aggressively.
Alipay’s exit from Zomato comes as other Chinese investors reduce their stakes in the Indian company. Last August, China’s Antfin sold a 10.3% stake in Indian financial giant Paytm.
Technology stocks such as Zomato have bounced back after falling amid last year’s market crash. Investors have also questioned the high valuations of some Indian startups that have made their stock market debuts in recent years.
© Thomson Reuters 2023
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