Dutch investment firm Prosus NV is looking to invest $150-180 million to grab the largest chunk of Swiggy’s 12% stake in Rapido, even as Nexus Venture Partners and WestBridge Capital are keen to increase their holding in the ride-hailing firm, three people said.
Dutch investment firm Prosus NV is looking to invest $150-180 million to grab the largest chunk of Swiggy’s 12% stake in Rapido, even as Nexus Venture Partners and WestBridge Capital are keen to increase their holding in the ride-hailing firm, three people said.
Rapido is “likely to be valued at $2.5-2.7 billion” for the stake sale, one of them said. At that valuation, Swiggy’s 12% stake in Rapido will likely be valued at a little over $320 million, or ₹2,825 crore.
Rapido is “likely to be valued at $2.5-2.7 billion” for the stake sale, one of them said. At that valuation, Swiggy’s 12% stake in Rapido will likely be valued at a little over $320 million, or ₹2,825 crore.
Rapido was previously valued at $1.1 billion when it secured $200 million in its Series E fundraising round led by WestBridge Capital in September last year.
Swiggy, which had acquired the 12% stake in April 2022 for $180 million, informed shareholders in July that it would re-evaluate its investment in Rapido as the mobility startup had also entered the food-delivery segment.
As of June, Prosus owned about 2.7% in Rapido, while Nexus and WestBridge owned 9.9% and 19%, respectively, show data accessed by Tracxn. Rapido founders Pavan Guntupalli and Aravind Sanka own 4.8% each, while Rishikesh S.R., another co-founder, owns 1.8%.
“Swiggy is running an independent process to look for buyers of its stake in Rapido. Some new investors (including private equity firms and large family offices), too, have been approached,” said the second of the three people aware of the developments.
Among Rapido’s other investors, TVS Motor Co. Ltd, Yamaha Motor Co. Ltd and Shell International BV are also likely to double down on the company, he said, adding that Swiggy has appointed Avendus Capital to help with the stake sale.
“The existing investors are likely to get some discount on valuation for upping their stake through the stake purchase,” he added.
Rapido, Swiggy, Prosus, Nexus, WestBridge, and Avendus did not immediately reply to Mint’s queries.
- Prosus plans to invest up to $180 million to acquire the largest portion of Swiggy’s 12% stake in Rapido. The stake sale is expected to value the mobility startup at $2.5-2.7 billion.
- Rapido’s existing backers Nexus Venture Partners, WestBridge Capital, TVS Motor, Yamaha, and Shell, too, are looking to raise their exposure to the ride-hailing firm.
- With a new food-delivery service challenging Swiggy and Zomato’s duopoly in India, Rapido is emerging as a serious rival in both India’s ride-hailing and food-tech markets.
Rapido’s growing clout
Rapido, which has raised over $500 million since its launch in 2015, has also drawn global attention: Uber chief executive Dara Khosrowshahi recently called Rapido—not Ola—its fiercest rival in India.
Swiggy’s investment in Rapido in 2022 had been pitched as a marriage of convenience with the ride-hailing firm’s riders doubling as the delivery platform’s couriers. But Rapido’s entry into the food-delivery has turned that synergy into potential conflict.
“The existing investors want to double down on Rapido given that the… company has turned around and is expected to get them bigger wins ahead once it lists,” said the third person aware of the development.
Rapido isn’t entering the food-delivery space blindly. Its partnership with Swiggy gave it a crash course in the food business—from peak demand hours to hot-selling restaurants, data it hopes to repurpose for its own food-delivery service, an investor in Rapido told Mint earlier.
Rapido’s Ownly food-delivery service charges restaurants in Bengaluru roughly half the usual commission levied by Swiggy and Zomato, its larger rivals in the space.
The company has also set up a wholly owned subsidiary called Ctrlx Technologies for its food-delivery service, with co-founder Aravind Sanka and vice president–finance Vivek Krishna named as directors, regulatory filings show.
India’s food-delivery market remains a tight duopoly, with Zomato holding a 54% share and Swiggy 46%, according to investment firm Bernstein.
In a 11 June note, Bernstein said Rapido’s entry into the food-delivery space was unlikely to disrupt the Zomato-Swiggy duopoly. Echoing that view, HSBC said new food-delivery players might attract customers at the lower end of the market, where margins are already slim, but were unlikely to significantly challenge the dominant platforms.
Swiggy, however, is under pressure: Its June-quarter net loss doubled year-on-year to ₹1,197 crore as it ramped up spending on quick commerce. Revenue rose to ₹4,961 crore from ₹3,222 crore a year earlier.
“This is something Swiggy needs. The stake sale infusion will give it a boost as the company has been loss-making for a while,” said Gaurav Verma, co-founder and head of investments at Ortella Global Capital, a venture capital firm.
“The exit delivers a 2.5x bump in cash compared to when Rapido was valued at $1.1 billion, nearly doubling since then,” he added. “Moreover, the stake was not translating into business growth for either Rapido or Swiggy through the strategic partnership.”