Uber Eats, the food delivery business of cab hailing firm Uber, was launched nearly two years ago in India, however established local brands like Zomato and Swiggy have not allowed Uber to make its own space among the Indian customers and now, according to ET report, Uber's food delivery business 'UberEats' is all set make a tactical exit by selling its India business worth $330 million to its local rival Swiggy.
Uber is selling its food business of India in order to push down its losses and help the company go for IPO with targeted valuation.
The acquisition is likely to be a share swap i.e. -- Uber would pay with stocks rather than with cash -- giving Uber around 10% stake in Swiggy, which was last valued at $3.3 billion.
In March last year, Uber did exactly the same when its exited its transport and food delivery businesses by selling it to deal with Singapore-based Grab. Uber closed that deal in exchange for a 27.5% in Grab .
Touted as a major revenue generator for Uber, Uber Eats was reported to be valued at over $20 billion and grossed $1.5 billion in sales in the first quarter of 2018 alone.
Expected to close by March, the acquisition -- if happens -- will be Swiggy's largest acquisition till date, and Uber's first divestment of its food business globally.
Uber's move to sell its business in one of Asian countries is in line with it's global strategy to cut down on losses as it prepares for a public offering (IPO) at a possible valuation of $120-150 billion.
Notably, Uber Eats had also held discussions with Zomato, but those talks fell through, said the ET report.
It may noteworthy that Swiggy's last fund-raise, which made it to valued at $3.3 billion, was led by Naspers including new backers Tencent and Coatue and Coatue is an investor in Uber too.
Coatue is a technology sector hedge fund that invests in public and private equity markets. It is led by Philippe Laffont, who founded the hedge fund after leaving Tiger Management in 1999.
This month, Swiggy acqui-hired Kint.io, a Bangalore-based
Artificial Intelligence (AI) startup, for an undisclosed amount. Kint.io, which was Swiggy's third acquisition, applies deep learning and computer vision for object recognition in video.