Ola acquires Foodpanda India, re-enters food delivery business

20 December, 2017, 01:41 | Author: Luis Fowler
  • Foodpanda

India's largest ride-hailing firm, Ola, has re-entered the online food-ordering and delivery business by acquiring Foodpanda's India unit as it gears up to take on UberEats of global rival Uber and local outfits such as Swiggy and Zomato. As part of the deal, Ola will also invest $200 million in Foodpanda India's operations.

The Berlin-based online food ordering and delivery marketplace Delivery Hero group, which acquired Foodpanda's India operations previous year, will receive stock in Ola as part of the transaction. The deal includes transfer of the Berlin-based company's India business to Ola in exchange for Ola stock, a press statement said.

Ola's Founding partner Pranay Jivrajkahas recently been appointed as the interim CEO of Foodpanda India - replacing former CEO Saurabh Kochhar, who chose to move out of the business unit to seek other opportunities. It heated up further after the entry of UberEATS-the food delivery service of Ola's rival Uber-in the Indian market a few months ago. The company had recently announced a tie-up with Zomato to enable food via from its in-car Ola Play platform.

Under the agreement, Ola, owned by ANI Technologies, will also commit to investing $200 million in foodpanda's India business.

The online food delivery market in India is expected to grow more than six fold to $750 million this year from about $120 million in 2015, according to a report by consultant RedSeer. He will be supported by the existing leadership team at Foodpanda India. In 2014 Ola entered into the food delivery space with Ola Cafe operating in four major cities, Delhi, Mumbai, Bengaluru, and Hyderabad.

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Swiggy is backed by Naspers and raised near-to $100 million this past year, Zomato scaled to reach profitability and expanded into logistics while global giants Uber (UberEats) and Google (Aero) entered the space with initially limited services. A year later, Ola Cafe was shut down along with Ola Store, a hyperlocal grocery delivery service, in March 2016.

Saurabh Kochhar, who was the head of Foodpanda India until recently, has chose to move on to pursue other opportunities. This is "by far the largest such fund infusion into India's online food ordering and delivery industry so far".

Foodpanda, previously owned by Germany's Rocket Internet, was sold to its larger rival Delivery Hero, last year, after the German firm made a decision to reshuffle its portfolio of businesses.

Speaking on the deal, Ola Co-founder and CEO Bhavish Aggarwal said, "I'm excited about our partnership with Delivery Hero as we team up to take Foodpanda India to the next level". Today, commission rates to restaurant partners have stabilised at 18-20 per cent; customers are willing to pay extra for delivery during monsoons and peak time because they get access to varieties of food with on-time delivery.

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