Indian food delivery start-up Zomato has been unable to access around $100 million from Ant Financial, its biggest Chinese investor, in a first major example of the impact of India’s new foreign investment laws, The Financial Times has reported citing people familiar with the matter.
In January, the online restaurant guide and food ordering platform said that it had raised $150 million (over Rs 1,065 crore) from existing investor Alibaba-affiliate Ant Financial, a Chinese financial giant, as a part of a larger funding round.
The investment is a part of a larger funding round, announced by Zomato Founder and CEO Deepinder Goyal in December 2019. Ant Financial has invested close to $560 million in Zomato, giving it a stake of more than 25 percent in the company.
“We have raised $150 million from Ant Financial as a part of a larger round. Ant Financial has been a steadfast partner in our journey towards achieving market leadership in on-demand food delivery in India, and dining out globally,” a Zomato spokesperson said in a statement in January.
In April, the government of India made its prior approval mandatory for foreign investments from countries that share land borders with India to curb “opportunistic takeovers” of domestic firms following the COVID-19 pandemic.
Countries which share land borders with India are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan. It also said that government approval will be mandatory for any transfer of ownership of any existing or future FDI in a company in India, which results in change in beneficial ownership, falling under this new restriction.
As a result, close to $100 million of the latest tranche of financing from Ant Financial is now going through the government’s approval process, said the report.
However, Zomato is “confident that the funds will come through”, said the report.
