Ola said it is committing an investment of $200 million for its food delivery business without detailing the timeframe for the deployment of the funds. "Pranay Jivrajka, Founding Partner at Ola, has been appointed as interim CEO of this business unit, supported by the existing leadership team at Foodpanda India".
The Berlin-based online food ordering and delivery marketplace Delivery Hero group, which acquired Foodpanda's India operations previous year, will receive stock in Ola as part of the transaction. The company had recently announced a tie-up with Zomato to enable food via from its in-car Ola Play platform. Our commitment to invest $200mn in Foodpanda India will help the business be focused on growth by creating value for customers and partners.
Niklas Ostberg, chief executive officer and co-founder, Delivery Hero AG, said the partnership with Ola will allow to further consolidate markets where it strategically makes sense to collaborate with leading local players. That Uber Eats has been able to deliver 10,000 orders a day only seven months after its India launch, as against Foodpanda's 40,000 orders a day five years after it launched, may have inspired Ola to jump into the fray, added Kumar, who says Ola's domain knowledge of hyper-local markets will be of help. However, on the other end, Ola's biggest rival in the country, Uber is making consistent progress through its unit UberEATS, which now active in 27 countries including 7 Indian cities.
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Foodpanda may have steadily lost ground to rivals Zomato and Swiggy, but it has been doing well of late. Additionally, the $200 million Ola has committed to invest in Foodpanda will definitely propel it to the top of the ladder. This is Ola's second try at building a food delivery business after it shut down Ola Cafe, the food delivery vertical and Ola Store, a hyperlocal grocery delivery service, in 2016. "Foodpanda has come to be a very efficient and profit-focused business over the last couple of years".
Rocket Internet-backed Delivery Hero, which owns Foodpanda globally, will get a minority stake in Ola. Foodpanda has over 15,000 restaurants across 100 Indian cities on its platform. For many, it makes flawless sense for Ola to acquire Foodpanda which has the market expertise and established user base than trying its hand and getting burned again with a similar attempt as Ola Cafe.
Like most ailing food tech companies, Foodpanda had also pruned its workforce by 300 people in 2015 in a bid to turn profitable.
Delivery Hero, which floated on the stock exchange in Germany in June, had acquired food delivery firm foodpanda and its Indian subsidiary in December 2016.