Economy, Sci & Tech

Russian Internet Firm Buys Food Delivery Business

Russian Internet Firm Buys Food Delivery BusinessRussian Internet Firm Buys Food Delivery Business

One of Russia’s biggest Internet companies, Group, announced it has bought German Rocket Internet Group’s online food delivery ordering service Delivery Club.

The Russian company is said to have acquired a 100% share of Delivery Club for $100 million in an all-cash transaction, with 90% of the funds paid in November and the remainder scheduled for 2017.

The deal is not subject to third-party approvals in either country, according to the Russian company, which will take on the growing food delivery market in Central Asia, Venture Beat reported.

“While Mail.Ru Group has the lead in the Russian mobile space, the acquisition of Delivery Club further enhances our mobile offering. The food delivery market continues to show steady growth and the combination of our network, resources and expertise with the leading market position of Delivery Club will allow us to take this business to even further success,” Mail.Ru Group chairman and co-founder, Dmitry Grishin, commented.

“Transitioning our business to Mail.Ru Group, a local IFternet market leader, allows foodpanda to focus more on the expansion in the Asian, Middle Eastern and Eastern European markets, solidifying and expanding our leading market positions,” stated Ralf Wenzel, founder and CEO of Foodpanda Group.

Pioneering the Russian online food delivery business, Delivery Club raised $400,000 in 2009, followed by $1 million from AddVenture and prominent Russian businesspeople in 2011 and another $4 million in a round led by AddVenture in 2012.

The Russian startup completed its fourth round of financing in December 2013, with $8 million secured from Phenomen Ventures, which also invested in Foodpanda, as well as from investors AddVenture and Guard Capital.

In June 2014, Delivery Club was taken over by Rocket Internet’s Foodpanda and its affiliated brand Hellofood.  The size of the transaction remained undisclosed, but the Russian media reported that it stood at around $50 million.

Delivery Club is now the leading player in the growing Russian food delivery market. The company claims that it has over 4,500 connected restaurants and generates 20,000 orders per day. The Delivery Club mobile app accounts for over 72% of these orders.

In H1 2016, Delivery Club’s net revenues reached 296 million rubles (a little more than $4 million at the average exchange rate for that period). The business was “broadly EBITDA neutral”, Group indicated.

Rocket Internet also has investments in the Iranian market in the guise of, a copycat-like service of Delivery Club. The company earlier bought, another rival that failed to gain market share.

The company owned in part by Rocket Internet and MTN of South Africa was created as part of a local company called Iran Internet Group, using MTN’s trapped funds in the country during sanctions.

Rocket has never officially confirmed it has operations in Iran, fearing reprisals from European and US regulators, but the registrar for the website is a Rocket employee based in the UAE.


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