Chinese e-commerce giant, Alibaba’s payment affiliate, Ant Small and Micro Financial Services Group has reportedly invested approximately $200 million in the online food delivery startup, Zomato.

In a regulatory filing by Info Edge, which is a large shareholder in Zomato, said that the food delivery company has signed a “definitive agreement to undertake a primary fund raise of an amount of approximately $150 million from Ant”. In addition to this, the filing also stated that InfoEdge has approved a proposal for divestment of 32,629 equity shares of Zomato for approximately $50 million to Ant.

“The Board of Directors…has accorded its approval…to allow divestment of 32,629 equity shares of Zomato Media…at a consideration of Rs equivalent of $50 million,” the InfoEdge filing said.

While Zomato declined to comment, industry analysts believe that the deal will give Zomato a valuation of over $1 billion. According to the filing, post the two transactions, InfoEdge will dilute its stake in Zomato to 30.9 per cent. The divestment of equity shares is expected to be completed by April 15, 2018.

Zomato was founded in 2008 by IIT-Delhi graduates, Deepinder Goyal and Pankaj Chaddah and has raised total funding of about $420 million, inclusive of the latest inflow of funds. The investment will strengthen Zomato’s position in its battle for market share against Ola-backed FoodPanda, UberEats and the Bengaluru-based Swiggy. There is speculation that the entry of the Alibaba-Softbank ecosystem in the Indian food delivery sector could trigger consolidation in the future. Alibaba’s entry into the India’s food tech sector makes it a competitive space, as the industry will now have three mega-huge investors, namely Alibaba, Softbank, and Naspers.

Ant Financial operates the world’s largest mobile and online payments platform, Alipay, which has over 520 million Chinese users and is partnered with over 200 financial institutions across China. Alibaba has been aggressively investing the Indian retail space. In 2015, the e-commerce giant invested in the Indian e-commerce player, Snapdeal. More recently, the company lead an investment round in the Indian online grocery store, BigBasket.

(Picture courtesy: Facebook)