“Yandex.Taxi” has closed a deal to buy a stake in the food delivery service Foodfox. This information was confirmed by the top Manager of the company — partner of “Yandex” and a former employee of this company familiar with the details of the transaction. The latter states that “Yandex.Taxi” acquired 100% of the Foodfox, paid about 500 million rubles ($8.4 million). According to a top Manager of the company — partner of “Yandex” – “transaction amount is less than $10 million.” Official representatives of “Yandex” and “Yandex.Taxi” and co-owner of Foodfox Sergey Polissar and a representative of the Target Fund Global (previously invested in Foodfox) declined to comment.
The delivery service Foodfox was launched in 2016. Its partners in Moscow are more than 1 million restaurants, including “Coffeemania”, Torro Grill, “Jean-Jacques”. The service was founded by former top executives of the online store “Lamoda” Sergey Polissar and Maxim Firsov.
According to “SPARK” data, the proceeds of LLC “Bigfoot” that manages Foodfox in 2016 amounted to 8.9 million rubles, net loss — 40,2 mln. Legal entity 100% owned by offshore company Deloam Management Limited. According to the Cyprus registry, 32,51% in the offshore company is owned by Sergei Polissar and Maxim Firsov, 16.74% by German companies FJ Beteiligungen Ug and NDT530 UG, 0.75% are with top managers of ‘Lamoda” – Burchard Binder and Dominique Picker.
Cyprus registry does not reflect changes in share owners of the offshore since June 2016, although the company has since reported on raising funds from outside investors. Last year Foodfox raised $1 million from venture Fund Target Global, co-founder of “Lamoda” Florian Jansen and Niels Tonsen and several business angels. The last transaction with Foodfox took place in June of this year. Global Target along with a pool of investors, among whom are the co-founder of “Carprice” Alexander Chernyak invested $5 million. Shares received by investors were not disclosed. Accurate business valuation of Foodfox in the latest round has not been reported by Target Global, it’s only been said that it is between $10 million to $20 million.
Why the acquisition price of the Foodfox service by “Yandex” ended up below estimates in the previous round. “The company has slowed development, needed the money, because of the low indicators it is difficult to find an investor. In the end, it had no choice but to sell “to the strategist”.
Interest of “Yandex” to Foodfox may be associated with the fact that companies have to develop a delivery service under the agreement with Uber. In July of this year “Yandex” and Uber announced the creation of a joint venture, which will include the businesses of the companies to order a taxi in Russia, Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan. At the same time in a collaborative framework it will also include the delivery service UberEATS food in these countries. The deal has not closed, the parties are awaiting approval from the Federal Antimonopoly Service. Uber and “Yandex” are planning to invest in joint venture $225 million and $100 million respectively. The consolidated value of the company, the control (59.3%) of which will receive the Russian Internet holding, valued by the parties at $3,725 billion.
“UberEATS has weak position on the Russian market, but since it had entered the perimeter of the transaction — it has to do something. Deal with Foodfox is due to the synergy with UberEATS and the need to strengthen the direction. Therefore, the buyer is “Yandex.Taxi”, not the “Yandex” mother company”. Financial Director of “Yandex” Greg Abovsky said on Friday, November 17, in an interview with Bloomberg that the company plans to expand the delivery of food service. “Next year we plan to invest very aggressively in this market,” said Abovsky.
Capacity of Russian market of food delivery from restaurants and shops at the end of the first half of November 2017 has already exceeded 100 billion rubles, and in general for 2017 is not less than 115 billion rubles, which is 16% higher than in 2016. The pace of growth in the medium term will remain at the level of at least 15% per year with the most dynamic growth will be for the delivery of food from supermarkets and hypermarkets. All food delivery services generally earn commission, which is taken from the owners restaurants for every order placed. The size of the fee on average is 25-30%.
Last year the market had seen the other largest Russian Internet-holding Mail.Ru Group go into this business. In November 2016, it purchased a $100 million project “Delivery Club”, which is considered the market leader (by mid-2017 it was connected more than 5 thousand restaurants, and, according to its own data service, it had formed about 25 thousand orders per day). In May of this year Mail.Ru Group consolidated 100% of another delivery service — ZakaZaka, purchasing cost $20 million.
“Yandex” relied on the development of a taxi service. In mid-November it became known that Mail.Ru Group interested in the taxi market and is considering buying a minority share of the group of companies “Vezet”. The latter was created by the merger of services of a taxi “Fasten Russia” (operates under the brands “Saturn” and RedTaxi) and “Vezet” (“RuTaxi”, “Leader”, “Vezet” brands).
The market for food delivery in the World traditionally takes 8-9% of the turnover of the restaurant market. The only exception is South Korea, where this segment comes to 14%. In Russia the market was developed faster due to the low base effect. Delivery Club and Foodfox will begin to compete among themselves for customers and to dump prices.