Prosus’ New Chief On Synergies Between Swiggy, Germany’s Delivery Hero

Prosus’ incoming CEO Fabricio Bloisi believes that portfolio companies Swiggy and Germany-based Delivery Hero have the opportunity to collaborate and explore synergies going forward. 

Prosus is the biggest stakeholder in Swiggy with 32% stake in the startup, and has been a key investor for Delivery Hero, which listed in Germany in 2017. 

“Prosus is closer to Delivery Hero and helping more Delivery Hero over the last few months. It’s closer to Swiggy and helping more Swiggy, obviously. The fact that I’m joining, we will have more space to collaborate between the business or to try to share best practice,” Bloisi told analysts on a May 17 call soon after his appointment was announced.

Bloisi will join the Naspers board as an executive director on July 1 and the Prosus board following the AGM in August 2024.

Interestingly, Bloisi is currently CEO of Brazil-based iFood, one of the largest food delivery startups in South America. While he did not share specifics on how Swiggy could collaborate with Delivery Hero, he mentioned that Swiggy’s experience with Instamart and quick commerce in India would hold iFood in good stead. 

“On India, we have Harsha [Swiggy cofounder Sriharsha Majety] and the Swiggy team. I think we learn with them many things in iFood, for example they have been very successful in the dark stores in the grocery area, and we are looking at it closely,” he told analysts about his experience in Brazil and how it might contribute to Prosus’ portfolio in India. 

Will Swiggy Look At Overseas Foray?

While the potential collaboration between Delhivery Hero and Swiggy is yet to take shape, there is the question of whether Swiggy is looking to expand into international markets through such a collaboration. So far, there have been no indications that the Bengaluru-based unicorn is looking at an overseas foray. 

Given the fact that Swiggy is looking to cut costs and turn profitable and has also filed pre-IPO papers in India, any collaboration with Delivery Hero will be closely watched.  

To give some context, in FY23 Swiggy had incurred a net loss of INR 4,179 Cr, while its operating revenue stood at INR 8,246 Cr. As per reports, for the first nine months in FY24 — between April 2023 and December 2023 — the company incurred a loss of $207 Mn (approx INR 1,650 Cr). 

Considering Zomato’s underwhelming experience with international operations, it would be interesting to see how Swiggy leverages Prosus’ portfolio synergies. Delivery Hero currently operates in 70 countries across Asia, Europe, MENA, and America region.

Zomato’s Tepid International Experience

It must be noted that Delivery Hero acquired Swiggy rival Zomato’s UAE business in 2019 and also invested $50 Mn in the now-listed food delivery giant’s international business. Zomato had expanded its operations outside India with acquisitions of Urbanspoon, Gastronauci, and Cibando, MenuMania, Lunchtime, among others.

But in the run up to its public listing and soon after its listing, the company shut down international operations in many regions soon after listing as it looked to streamline operations. 

Zomato, which went public in 2021, posted a maiden profit of INR 351 Cr for a whole fiscal year in FY24. 

The Gurugram-based food delivery and quick commerce giant pulled the plug on pretty much all international businesses, including the United States, United Kingdom, Singapore and now Lebanon. It also liquidated subsidiaries in Vietnam and Czech Republic earlier this year. 

So the question is will Swiggy actually see any upside from a potential synergy with international players like Delivery Hero, especially when it didn’t work out for Zomato? 

Besides talking about Swiggy, Bloisi also said that he would be spending time in India over the next few weeks to delve deeper into Prosus’ portfolio including Meesho and PayU. “So my approach to India is you can expect me to spend more time there and learning much more, and thinking how we can use our global structure to leverage our India position.