Ola Acquires Foodpanda's India Business from Delivery Hero Group

20 December, 2017, 01:38 | Author: Shannon Aguilar
  • Ola Acquires Foodpanda to Compete Uber Eats in Food Delivery Services

Ola, which is flush with funds after raising $1.1 billion in October from Chinese internet behemoth Tencent Holdings, has committed an investment of $200 million into Foodpanda.

Foodpanda India will benefit from Ola's scale and efficiencies as a platform, also having leveraged learnings from Delivery Hero's global best practices.

Ola, the homegrown cab hailing and mobility platform, is taking rival Uber head-on in the food ordering and delivery service space with the acquisition of Foodpanda that has been struggling with its operations in India. A slug of money came in between 2014-15 in the so-called food tech space in India but investor sentiments waned as user acquisition costs on delivery remained high and it started to become apparent that making money in this business would be tough and require massive capital which Rocket was unable to pump into Foodpanda. The company had recently announced a tie-up with Zomato to enable food via from its in-car Ola Play platform. "Our commitment to invest $200 million in Foodpanda India will help the business be focused on growth.", Ola co-founder and CEO Bhavish Aggarwal said.

Niklas Östberg, CEO and co-founder of Delivery Hero AG, said the partnership will allow it to further consolidate markets.

This is Ola's second attempt to enter the food delivery market in India.

Foodpanda India has been up for sale for as low as under $15 million since January a year ago. More significantly, the company's losses have also narrowed down to 69 percent which is Rs. 44.81 crore compared to Zomato's reported loss of Rs 389 crore and Swiggy's widening loss of Rs 205 crore.

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On Tuesday, Ola said it was targeting investment of $200m as it seeks to expand Foodpanda´s footprint across India.

I'm excited about our partnership with Delivery Hero as we team up to take Foodpanda India to the next level. For many, it makes flawless sense for Ola to acquire Foodpanda which has the market expertise and established user base than trying its hand and getting burned again with a similar attempt as Ola Cafe.

Foodpanda's global operations were sold to Delivery Hero by investor Rocket Internet in December previous year, a fallout of the bloodbath that the food tech space witnessed in India.

UberEATS delivers in about half a dozen Indian cities while foodpanda is present in more than 100 cities.

Foodpanda India was set up as the local unit of Berlin-based FoodPanda GmbH, a Rocket Internet portfolio firm, in 2012. For anyone trying to comprehend this shift first has to understand two things.The cut-throat competition and the huge potential of food delivery business, and Ola's constant effort to diversify its business.

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