Spanish meals supply firm Glovo is promoting its Latin American operations to German meals supply big Supply Hero.
Supply Hero will purchase Glovo’s operations in eight markets — Peru, Ecuador, Costa Rica, Honduras, Guatemala, Argentina, Panama and the Dominican Republic — in a deal value as much as €230m. It additionally features a €60m performance-based earn-out, and is predicted to shut within the subsequent few weeks.
Each companies have already got a robust worldwide presence; Supply Hero operates in 44 nations world wide, whereas Glovo’s on-demand supply service is stay in 22 nations throughout Europe, the Center East, Latin America and sub-Saharan Africa.
The transfer will allow Glovo “to concentrate on key markets the place we will construct a long-term sustainable enterprise and proceed to offer our distinctive multi-category providing to our prospects”, mentioned Glovo chief govt Oscar Pierre. Meaning increasing additional into south-west Europe and the Center East.
This month, Glovo will launch in a number of new markets, together with Moldova, Kyrgyzstan and Uganda, the place it thinks it has an opportunity of turning into a market chief.
Supply Hero, in the meantime, is now properly positioned to dominate the Latin American meals supply area. “They’ve every part it takes to go on and turn into the main participant within the area,” says Pierre.
The Covid money crunch
Glovo, which hasn’t had the simplest time through the pandemic, has additionally secured a convertible mortgage of €120m, issued by Lugard Street Capital and Luxor Capital. This brings complete funding raised by the five-year-old company to €580m.
When Covid hit, Glovo noticed orders drop throughout all of its markets. In its two largest, Spain and Italy, 70% of the restaurants on its platform closed their doorways, cofounder Sacha Michaud advised Sifted earlier this yr.
The corporate’s nascent on-demand grocery supply enterprise, in the meantime, noticed demand soar; grocery orders went up by 300% in Spain in April, whereas Glovo additionally managed to signal new offers with supermarkets.
Different meals supply gamers have been rocked by shifts in demand too; at one level, London-based Deliveroo even warned that the “significant decline in revenues” it skilled because of the disaster may result in its collapse.
Specializing in being primary
Ducking out of Latin America isn’t an uncharacteristic transfer. Glovo has expanded into — and pulled out of — a number of markets earlier than; in Might 2019, the corporate pulled out of Brazil (after shedding close to €20m, as Pierre advised Sifted at Slush), a month after exiting Chile. In January this yr, it additionally left behind Turkey and Egypt.
Glovo focuses on nations the place it thinks it may be the market chief (or quantity two); it has at all times prevented battling it out in markets the place there may be already sturdy competitors (and for that reason, by no means launched within the UK, for instance).
In Latin America, it has come up towards stiff competitors in Rappi, the Colombian supply app backed by SoftBank. In Turkey, native competitor Getir has been growing fast.
Firstly of the yr, Glovo was additionally firmly centered on reaching profitability by early 2021. That may appear a bit of trickier now.
Amy Lewin is Sifted’s deputy editor. She covers VC, mobility and variety in tech, and tweets from @amyrlewin