Online food delivery startup Swiggy is in advanced stages of closing a $700-750-million round led by existing investor Naspers, said two people familiar with the matter, requesting anonymity.

Naspers will pump in around $350 million, while a consortium of Korean investors, including STIC Investments and Korea Omega Investment, will together chip in with $50 million, they said. The balance amount is expected to be infused by other existing investors.

“A total commitment of $540 million has come so far," said the first person cited above. “If existing or new investors don’t give the remaining amount, Naspers may put in more."

Swiggy, STIC Investment and Korea Omega Investment did not respond to Mint’s queries till press time. A Naspers spokesperson declined to comment.

The latest round, which comes over eight months after Swiggy raised $1 billion, will value the Bengaluru-headquartered firm at around $4 billion, said the second person. Once the transaction is completed, the company’s valuation will have surged almost four times since June 2018, when it raised $210 million and gained the “unicorn" status.

Swiggy was initially in funding talks with SoftBank, as reported by Mint on July 12, but the discussions fell through as the Japanese giant was unclear about the winner—Swiggy and Zomato—in India’s food-tech space. “Right now it looks like it’s hard to pick a winner between the two," said a venture capitalist, requesting anonymity. “But the two companies are slowly moving into a mature phase and discounts are being cut down, which is good."

Over the last 8-12 months, Swiggy has been aggressively foraying into the hinterland, chasing growth from small town users. In 2019 alone, Swiggy launched services across 185 towns. Arch rival Zomato, too, has been on an expansion spree, adding 300 cities. Swiggy has also expanded its offerings, including Swiggy Stores, its hyper-local delivery service of grocery and fresh produce, and Swiggy Daily for home-cooked meal subscription.

The fresh funds will be used to expanding its footprint in new regions and strengthen the two new platforms, Swiggy Stores and Swiggy Daily.

While Swiggy has been growing aggressively, it has also been burning huge amounts of cash. According to industry estimates, Swiggy clocks 900,000-1 million daily orders, and burns close to $40 million every month. The firm is trying to reduce the high cash burn by diversifying and optimising its fleet usage.

Some of Swiggy’s existing investors include DST Global, China’s Meituan Dianping and Coatue Management. Tencent, Hillhouse Capital and Wellington Management joined Swiggy’s investor list during the last round in December.

Indian food delivery firms have generated investor interest on the back of the expected growth in this segment. The online food ordering market in the country is pegged to grow over 16% year-on-year to touch $17.02 billion by 2023, according to Market Research Future, a business consultancy.

“There are only two large players in the space—Zomato and Swiggy. Swiggy has the first-mover advantage in some cases and has demonstrated strong execution too. Investors want to follow leaders, hence we will keep seeing investor interest in a firm like Swiggy," said Anil Joshi, managing partner at Unicorn Venture Partners.

The Economic Times had reported recently that Swiggy was in talks with South Korean funds to raise money.

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