Food delivery app Swiggy is in talks with South Korean funds for participation in a $500 million funding round, reports The Economic Times. The company is in discussions with Korea Investment Partners, Mirae Asset Management, STIC Investments, and Neoplux, sources told the publication.
The round is learned to be led by Swiggy’s largest investor, South African internet giant Naspers, which owns a stake of about 36% in the company, along with Tencent, one of the source said. Apart from the primary capital, there’s a secondary share sale which is also being worked out, they said. The exercise is expected to value the company at around $4 billion, up from its $3.3 billion valuations dated December 2018.
Swiggy’s investment speculations come at a time when it is in a strong tussle with its closest rival Zomato to maintain its growth. Moreover scoring about a million orders a day both the competitors have been burning up to $40-50 million monthly to acquire users in a cash-guzzling sector that has been reliant on discounting to ratchet up growth.
Swiggy was founded by Sriharsha Majety, Nandan Reddy, and Rahul Jaimini in 2014. The company prides to have over 2 Lakh delivery partners and more than 1 Lakh restaurant partners spread across 200+ Indian cities.
The food delivery company had posted a 220% jump in its revenue for FY18. According to the company filings, accessed via business intelligence platform Tofler, the company had earned $63.77 Mn in revenue, of which its operational income was $60.22 Mn.
Last month, Swiggy was in talks with the Carlyle Group for a $200 Mn funding round, while Japanese investor SoftBank was also reported to be eyeing an investment of around $300 Mn – $500 Mn in the food-tech company. It’s unclear whether SoftBank would participate in the latest round.
In an earlier interaction with ET, Swiggy’s COO Vivek Sunder said that he sees growth this year to be largely driven by customer repeats from the top 50 million internet users. This would include expanding restaurant selection and scaling up products, including loyalty program Swiggy Super, SwiggyDaily, single-serve meals product Pop, and student campus program Launchpad.
Interestingly, Swiggy’s strategy mirrors that of its investor and China’s largest food delivery network Meituan-Dianping, Startups such as Swiggy can certainly hope on rapid urbanisation and rising income in our domestic market, Also easy availability of food at cheaper cost makes them a much sort after service.