Uber sells its entire 7.78% stake in Zomato for $392 million in bulk deal
NEW DELHI: As expected ride-hailing giant Uber Technologies on Wednesday sold its entire 7.78% stake in Zomato for $392 million in a bulk deal. As per data provided by the BSE, two institutional investors - Fidelity and ICICI Prudential Life Insurance - bought stakes in the loss-making company.
Uber sold its entire 61.22 crore shares of Zomato at a price of Rs 50.44 per share. Fidelity Investment Trust Fidelity Series Emerging Markets Fund bought 5.44 crore shares of Zomato in the bulk deal at an average price of Rs 50.26, while ICICI PrudentialLife Insurance bought 4.5 crore shares at Rs 50.25 per share.
As per reports, nearly 20 global and Indian funds have taken a pie of the food-tech firm via a bulk deal on Wednesday. Shares of Zomato crashed about 10% on the BSE in the early trade on Wednesday on Uber’s stake sale reports. However, it managed to close flat at Rs 55.40 apiece.
Uber’s exit raises questions about the future performance of Zomato stock, which is down over 60% in 2022. While analysts at large feel Zomato shares would reach Rs 100 level in one year, Uber is exiting the firm at prices much lower than Zomato’s IPO price of Rs 76 and its 52-week high of Rs 169. It could not exit earlier due to the mandatory one-year lock-in period of pre-IPO investors.
Uber had sold Uber Eats, its food delivery business, in India in an all-stock transaction to Zomato in 2020 for a 9.99% stake. By the end of Q1FY2023, Uber was holding 7.78% in Zomato and was its second-largest stakeholder, only after Info Edge (India) which owns over 15% stake in the company.
The stake sale by Uber comes just after the company in its Q2CY2022 results informed that it lost $245 million on its Zomato investment during the quarter and $707 million in the first half of the year.
Uber’s total losses in the June ending quarter came in at $2.6 billion but it turned cash flow positive for the first time. Meanwhile, Zomato reported narrowing its net losses by 48% to Rs 186 crore in the June quarter and said it aims to reach EBIDTA breakeven by the Q4 of next year.