Swiggy’s Latest Funding Round May Deliver Super Quick Returns To Early Investors

Swiggy’s upcoming funding round may include about $300 Mn worth of secondary share sales by some of the Bengaluru-based company’s early investors, reports said.

The latest round of funding, which is expected to go up to $900 Mn go, may push Swiggy’s valuation to between $2.5Bn – $3 Bn.

The secondary share sale includes Bessemer Venture Partners, Norwest Venture Partners, Accel and SAIF Partners, who are expected to sell a part of their total 39% stake in the company.  Swiggy’s earliest investors, RB Investments and Harmony Partners, will exit completely, entirely selling their cumulative 3% stake.

Notably, Norwest, which has put in about $20 Mn in Swiggy since 2015, is expected to rake in $80 Mn through a partial stake sale.

The secondary share sale is likely to be made at a discount to the valuation being negotiated for the primary investment, according to the report.

Swiggy’s Fast-Changing Stakes

Typically in the Indian startup ecosystem, early investors wait for long periods of time to fully cash in on their investment. However much like its rapid rise to unicorn status, Swiggy has bucked the trend with the upcoming funding round, delivering some super-quick returns to its growth-stage investors.

With these exits, Naspers may increase its stake in Swiggy from 23.3% to 40% by investing over half the corpus through a mix of primary and secondary share purchases.

At the same time, China’s Tencent is now expected to invest $50 Mn-$100 Mn in the funding round.

Existing investors Meituan Dianping, Coatue Management and DST Global are also expected to participate in this funding round.

An email query sent to Swiggy didn’t elicit any response till the time of publication. However, Naspers spokesperson said, “It is the company’s policy to neither acknowledge nor deny its involvement in any merger, acquisition or divestiture activity nor to comment on market rumours.”

If Swiggy’s funding round is concluded by December, it would be the company’s third major funding this year itself. The company had joined unicorn club in June at a valuation of $1.3 Bn with $465 Mn funding till date.

The four-year-old food delivery company is in the high cash burn business and has been scooping up funds at a fast pace while being synonymous with growth and becoming a major player in the sector.

In the last one year, early investors have been finally able to start exiting from startups profitably. Here are some of the major exits in recent times:

• Japanese conglomerate SoftBank sold 23.6% of its stake in Indian ecommerce giant Flipkart when global retailer Walmart acquired the company.
• PremjiInvest was to make more than $130 Mn on its $25 Mn (INR 155 Cr) investment in Myntra as a result of the Walmart-Flipkart deal.
• Venture capital and private equity firm SAIF partners received a 16X return on its investment in MakeMyTrip.
• India Quotient, an early stage investment firm, was looking to make a partial exit from vernacular social media startup Sharechat and made a neat 25-30X return on its investment.
• Lightbox, along with other investors, made huge returns when Reliance Industries invested $180 Mn in edtech startup Embibe.

[The development was reported by ET.]