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Mumbai | Bengaluru: E-grocer Grofers has signed a deal with Zomato and Tiger Global to raise $120 million, sources aware of the matter said. The new funding will value the Gurugram-based startup at a little over $1 billion, as it joins a growing pool of Indian companies in the coveted unicorn club.

IPO-bound Zomato is expected to file a proposal with the country’s antitrust regulator, the Competition Commission of India, this week seeking a nod for the investment, a person in the know of the matter said.

ET was the first to report on May 7 that Zomato
was in talks to invest $100 million in Grofers at a $1 billion valuation.

In the current round, Zomato will invest around $100 million while Tiger Global will put in the rest of the capital in the SoftBank-backed online grocery firm. SoftBank owns around 50% stake in Grofers.

The development comes at a time when Zomato’s rival Swiggy is pushing aggressively into the online grocery segment with businesses like Supr Daily and Instamart. The
recent fundraising from SoftBank Vision Fund will be directed to expand its hyperlocal delivery offerings.

Emails sent to Grofers and Zomato spokespersons did not immediately elicit a response.

Hyper competitive grocery market

Zomato and Grofers had
explored a potential merger at the onset of the Covid-19 pandemic last year, ET had reported then. Those discussions fell through and Grofers
raised additional capital from SoftBank.

Earlier this month, Saurabh Kumar, cofounder of Grofers,
announced he was moving on from the firm he started eight years ago. SK, as he is popularly known, remains a shareholder in the company.

Grofers cofounder and CEO Albinder Dhindsa recently announced that the company’s entire tech team will get a
‘no-ifs-and-buts’ 33% increase in salary starting July as this vertical is one of its top priorities.

Previously, Grofers
had explored a listing on the tech-heavy Nasdaq in the US through a Cantor Fitzgerald blank cheque firm, ET first reported on February 24 . It decided to scrap the IPO plan and remain private, especially after securing SoftBank funds.

According to data from PGA Labs—the market intelligence unit of Praxis Global Alliance—Grofers had 13% market share in FY21 compared to market leader BigBasket, which has 37% besides Reliance’s JioMart with 4% share. This data showed the Indian e-grocery market is estimated to reach $ 22 billion by 2025. Industry data estimated the market to be $3 billion in size last year.

Meanwhile, Tata Group has acquired a majority stake in country’s largest e-grocer BigBasket and pumped in another $200 million in primary capital into the company. Horizontal e-tailers like Amazon and Walmart-owned Flipkart are also ramping up their grocery play as consumers increasingly come online for essentials.

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