Zomato an Indian multinational restaurant aggregator is expected to invest around $100 million in Grofers, an Indian online grocery delivery service. After a feasible merger between the two fell through last year at the onset of the Covid-19 pandemic.

Zomato’s focus is on larger financing round and may value the Gurugram-based online grocery firm at around $1 billion. The focus is on capital infusion, unlike last year when Zomato would have likely acquired Grofers in an all-stock deal.

“Zomato has ambitions in the grocery segment and wants to partner with a specialty grocery company rather than build something of its own...They want to stay focussed on the food business,” says sources.

Grofers — which was looking to list on the tech-heavy Nasdaq in the US through a Cantor Fitzgerald blank check firm, on February 24 is expected to scrap the IPO plan and continue to remain private.

Grofers, largest shareholder SoftBank Vision Fund (SVF), holds about 50 percent stake, is looking for its initial public offering via a special purpose acquisition company (SPAC).

Grofers states, “We are in regular touch with the investor ecosystem and are seeing a lot of inbound interest given grocery is an essential need and a high growth segment. Given the dynamic business environment, there will always be room for speculation, but our team is focused on serving more families.” Further adds that the company is witnessing a year-on-year growth of around 110 percent.

Zomato’s investment in Grofers comes at a time when SVF is close to deploying $450 million in rival Swiggy, largely to help the restaurant aggregator expand its services beyond food delivery.

Swiggy has been pushing its quick grocery delivery service Instamart and daily essentials delivery platform Super Daily in an attempt to diversify.

SoftBank with a successful DoorDash IPO in the US under its belt and GoPuff’s valuation soaring to $8.9 billion has seen the on-demand delivery category clock good returns for its portfolio firms globally. Zomato, had experimented with gofers during the initial months of the pandemic, discontinued its services under Zomato Market as it was not core to its business.

Deepinder Goyal, cofounder and CEO, Zomato, says, “We did grocery because the food delivery business was gone during the lockdown. For 3-6 months, it worked really well and helped us get through the crisis. Eventually, it didn’t make sense.”

“Now that the company has decided to shelve its IPO, it is looking to mop up around $200 million.” The online grocer had been eyeing between $400 million and $500 million through a listing on the tech-heavy Nasdaq, which was scheduled for this month at a possible valuation of more than $1 billion, a report said.