In a strategic move set to make waves in the financial world, Alipay, the renowned Chinese payments giant under the ownership of Ant Group, is gearing up to divest its 3.4% stake in India’s leading food delivery behemoth, Zomato. The anticipated block deals on Indian stock exchanges are estimated to fetch nearly $400 million, marking a significant financial maneuver in the dynamic landscape of international investments.
The plan, unveiled through three credible sources and substantiated by a detailed review of the deal’s term sheet by Reuters, discloses Alipay’s intention to offload its entire 3.4% stake in Zomato. The involved parties, Bank of America and Morgan Stanley, are slated to act as advisers for the deal, scheduled for execution later this week on Indian exchanges. The sources, preferring anonymity due to the confidential nature of the plan, have provided exclusive insights into this financial development.
Zomato, Bank of America, and Morgan Stanley have yet to issue official statements in response to the news, underscoring the confidential nature of the deal. Alipay, also maintaining silence outside regular business hours, has left the financial community eagerly awaiting official confirmations.
The backdrop of this strategic move is painted against Zomato’s impressive market performance, with its shares experiencing a staggering 90% surge in the current year. This remarkable turnaround follows a challenging period in 2022 when global tech stocks, including Zomato, faced a significant downturn. The timing of Alipay’s decision to exit the investment aligns with this resurgence in Zomato’s market value.
According to the first source, the motivation behind Alipay’s move lies in the desire to capitalize on Zomato’s recent market momentum. “Alipay wants to cash out… the (market) timing is good,” the source stated, emphasizing the strategic significance of the decision.
The block deals are poised to transpire at 111.28 rupees per share, reflecting a shrewd 2.2% discount to Zomato’s closing price on Tuesday, as indicated by the term sheet. This pricing strategy adds an intriguing dimension to the deal, showcasing Alipay’s calculated approach to maximize returns.
This isn’t the first instance of a major stakeholder reshuffling its Zomato portfolio. In October, Japan’s SoftBank divested a 1.1% stake in Zomato, underscoring the dynamic nature of the food delivery industry and the growing demand for online ordering services in India.
Interestingly, Alipay’s exit from Zomato mirrors a broader trend of Chinese investors reducing their holdings in Indian companies. In August, China’s Antfin sold a substantial 10.3% stake in India’s financial giant, Paytm, signaling a recalibration in investment strategies.
The resurgence of tech stocks like Zomato is a noteworthy trend, bouncing back from the challenges of the previous year’s market meltdown. This period saw investors scrutinizing the valuations of Indian startups that had recently entered the stock market, raising pertinent questions about sustainability.
As Alipay readies itself for this significant exit, the financial world watches closely, anticipating the ripple effects of this strategic move on the ever-evolving landscape of international investments and the Indian food delivery sector.( Resource: Media report by Economic times)
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