Alipay has announced its decision to divest its entire 3.44% stake in Indian foodtech major Zomato. The strategic move, executed through block deals valued at approximately $400 million, is expected to be finalized later this week with the guidance of financial giants Bank of America and Morgan Stanley.
This decision comes on the heels of a remarkable surge in Zomato’s shares, which have witnessed an impressive 90% increase in value throughout the current year, fueled by the company’s recent turn to profitability. The block deals are set to transpire at INR 111.28 per share, representing a 2.2% discount to Zomato’s closing price on Tuesday, November 28, as the Indian food delivery giant concluded the trading day at INR 113.8 on the Bombay Stock Exchange (BSE).
Alipay’s strategic move is part of a broader trend of Chinese investors offloading stakes in Indian companies amidst heightened geopolitical tensions between New Delhi and Beijing. Sources indicate that the divestment aligns with a wider narrative of Chinese investors reevaluating their positions in the Indian market, a trend that has seen several notable exits in recent months.
Last year, Alipay had already sold nearly half of its Zomato stake—26.3 crore shares valued at INR 1,631 crore—in a bulk deal. The Chinese payments giant had initially invested $360 million in Zomato back in 2018, acquiring a substantial stake of 77.7 crore shares. In a strategic move just before Zomato’s Initial Public Offering (IPO) in July 2021, Alipay divested 21.8 crore shares, setting the stage for its eventual exit from the Indian foodtech giant.
This move is particularly noteworthy as it underscores the shifting sands of foreign investments in Indian startups. The decision by Alipay to completely divest from Zomato reflects not only the company’s changing investment strategy but also the broader challenges faced by Chinese investors in India’s increasingly scrutinized investment landscape.
The geopolitical tensions between the two Asian giants have led to a wave of divestments by Chinese investors in Indian companies. In August of this year, Antfin sold a substantial 10.3% stake in Paytm amid the ongoing border tensions, with the stake being snapped up by Paytm’s founder and CEO, Vijay Shekhar Sharma.
While Alipay’s exit from Zomato is part of a larger trend, it also aligns with a wave of foreign investors capitalizing on the robust performance of new-age tech stocks in the Indian market. SoftBank, for instance, has been steadily reducing its stakes in both Zomato and Paytm. In a notable move, Warren Buffett-led Berkshire Hathaway made headlines last week by divesting its entire 2.46% stake in Paytm.
As Alipay proceeds with the block deals to sell its remaining stake in Zomato, the outcome will be closely monitored by market analysts. The divestment not only impacts Alipay’s investment portfolio but also serves as a barometer for the broader landscape of foreign investments in Indian startups. It highlights the intricate dance between global economic forces and geopolitical uncertainties that continues to shape cross-border investment decisions in the tech-driven Indian market.
