Uber is in talks to sell its food delivery business in India for about $400m as it tries to shed lossmaking operations and become profitable in 2021, according to people with knowledge of the deal.
The US ride-hailing group is trying to sell UberEats in India to local delivery app Zomato, which was founded in 2008 and is backed by Chinese payments group Ant Financial.
“Uber is in discussions with Zomato to sell the business,” said one person familiar with the talks, and that the “ballpark figure” was about $400m.
The person said that after Uber’s disappointing initial public offering the company needed to “think about burning cash”, adding: “Uber needed to be one or two in India otherwise it would pull out. I don’t think the brand will continue in India.”
Uber and Zomato did not respond to requests for comment.
The Financial Times reported in October that Ant was in talks to lead a $600m investment round into Zomato, at a potential valuation of more than $4bn.
UberEats is not profitable in India, where it faces intense competition from local competitors Zomato and Swiggy, which is backed by Naspers and Tencent.
Food delivery has rapidly become popular in India and attracted billions of dollars from foreign investors. But margins are thin and companies have spent heavily on discounts to win market share.
The potential deal, first signalled by the Times of India, would mark another round of industry consolidation in which Uber — the world’s largest ride-hailing group with operations in 63 countries — retrenches in exchange for a stake in a rival.
In 2018 Uber sold its south-east Asian business to local rival Grab, but took a board seat and a 27.5 per cent stake in the business. In 2016 it withdrew from China, in exchange for a 19 per cent stake in Didi. A similar 2017 exit in Russia resulted in a 38 per cent stake in Yandex.Taxi.
Uber’s share price has dipped since its IPO, and the company is now valued at $49bn, well below the $100bn valuation pitched by bankers before it went public.
The group has taken steps to shore up investor support and said last month it planned to be profitable — on an adjusted ebitda basis — for the full year of 2021, following what is expected to be a loss of up to $2.9bn this year.