Japanese conglomerate SoftBank is planning to invest about $450 Mn in Swiggy, valuing the food delivery app at $5 Bn, according to multiple reports. The latest investment is said to be an extension of Swiggy’s $800 Mn round announced by the company cofounder and CEO Sriharsha Majety in an internal email this month. The company has already raised the first tranche of this round earlier this week.
As per media reports citing sources, SoftBank founder Masayoshi Son was in talks with the two Indian food delivery giants Zomato and Swiggy as the VC firm finally wanted to take a bet on the sector in India. The Japanese conglomerate has decided to back Swiggy as it is looking to diversify its offering with quick grocery delivery service Instamart and daily essentials delivery Supr Daily, besides food delivery and cloud kitchen access.
The Covid-led momentum for online delivery platforms has been a big factor in SoftBank wanting to pick up stake in the food delivery space in India as well, a person aware of the development told ET. Besides this, the successful initial public offering (IPO) of US-based food delivery platform DoorDash in December 2020 is another reason why SoftBank is looking to jump into the segment.
SoftBank had previously held talks with both Zomato and Swiggy since 2017, even when investors of both the companies were pushing for a merger to drive consolidation in a high-burn segment.
The latest funding comes at a time when Swiggy is looking to build a $1 Bn war chest to fend off competition coming from IPO-bound Zomato, which too is looking to build a cash reserve of $1 Bn before going into the public market. Zomato has raised $2.1 Bn to date, with a $660 Mn round announced in December 2020 and another $250 Mn round in February 2021. The company is currently valued at $5.4 Bn.
As a pre-IPO exercise, the company has also converted itself from a private company to a public limited company and renamed itself to Zomato Limited effective from April 9 onwards. Besides this, it has reportedly finalised Kotak Mahindra Bank, Morgan Stanley, Citi Bank, Credit Suisse and Bank of America as the bankers of the proposed IPO and it will file the draft prospects for the IPO next week.
Swiggy was founded in 2014 by Rahul Jaimini, Sriharsha Majety and Nandan Reddy. The company offers food delivery as well as grocery along with hyperlocal deliveries. It claims to connect consumers to over 160K restaurant partners and stores across more than 520 cities. Swiggy, just like Zomato, fulfills about 1.3 Mn to 1.5 Mn orders per day.
The company has raised about $2.4 Bn to date, from investors like Bessemer Venture Partners, Prosus Ventures, DST Global, Amansa Holdings, Carmignac, Falcon Edge Capital, Goldman Sachs and Think Investments.