Ant Financial to net nearly 6X return on investment from Zomato parent stake sale
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Chinese ecommerce giant Alibaba 's affiliate, Ant Financial, is set to sell its remaining 1.9% stake in Zomato and Blinkit parent Eternal on Thursday through block deals that will generate Rs 5,370 crore at the floor price.The deal will take Ant Financial's total proceeds from selling its stake in the food and grocery delivery company to more than Rs 18,000 crore, or nearly six times its investment of Rs 3,246 crore. It had made the investment in several tranches between 2018 and 2020 and held the stake through two entities.According to a term sheet seen by ET, Ant Financial will sell Eternal 's stock at a floor price of Rs 285 apiece, a 5% discount to the company's closing stock price of Rs 298.90 on the BSE Wednesday.The Chinese firm's move comes days after it fully exited fintech company Paytm , selling its 5.8% stake.Eternal's market capitalisation as on Wednesday stood at Rs 2.9 lakh crore, or around $33 billion. The company's stock price had scaled highs until December last year on the back of its market leadership in the buzzing quick commerce sector. However, as cash burn increased in the highly competitive space, the share price started tempering.With management's outlook on Blinkit's margins improving , analysts have revised their view on Eternal's stock.'Growth remained strong, and outlook on margins has improved, as worst seems behind on competition, along with upside from 1P (Blinkit's transition to inventory-led model). Food delivery growth moderated, but management expects a pick-up with range-bound short-term margins,' Jefferies said in a note following the company's quarterly results in July. 'Progress in quick commerce suggests that our concerns on competition, which led to the downgrade in January, were unfounded.'The brokerage firm had also upgraded Eternal's stock to 'Buy'.Eternal posted a 90% fall in net profit to Rs 25 crore in the June quarter, despite a 70% jump in revenue to Rs 7,167 crore.
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