Swiggy is not known for making large strategic bets but that is set to change as the SoftBank-backed company is in advanced stages to invest in bike taxi firm Rapido. Swiggy and Rapido have been in talks for the past couple of months for a potential deal, according to three people aware of the details of the transaction.
“The terms of the deal have been finalised wherein Swiggy would lead a $200 million round in Rapido. It’s likely to invest around $100 million whereas the remaining $100 million would come from new and existing investors,” said one of the people requesting anonymity.
The investment would offer exposure to Swiggy in the mobility business and strengthen its food delivery (hyperlocal) logistics capabilities. The food delivery and quick commerce company is also in late-stage talks to raise a new round at $10 billion.
Sources emphasised that the round is likely to conclude in a few weeks from now.
After facing disruption due to the pandemic in FY21, Rapido’s business has bounced back in the ongoing fiscal (FY22). It does about 10 million rides every month and 80% of the volume comes from the bike taxi segment and the remaining 20% from auto and logistics (mainly food delivery), as per sources.
A year ago, the company had enabled auto booking on its app.
“Rapido had also held conversations with Zomato but the talks did not materialise,” said another person who also wished not to be named.“Ola is its nearest competition in the bike-taxi segment with less than 50% of Rapido’s volume,” said the above-quoted person.
Sources asserted that Ola held talks to acquire Rapido in a $500 million worth deal but the talks didn’t progress into a deal for some unknown reasons.
With this deal, Rapido will expand its food delivery capability and drive a significant volume of Swiggy’s food and non-food categories.
“The deal will propel Rapido closer to unicorn valuation (around 900 million),” said the second person who also wished not to be named. According to Fintrackr’s estimates, it was valued at around $250 million in August.
Queries sent to Rapido, Swiggy and Zomato didn’t elicit any immediate response. We will update the story as and when they respond.
The Mobility business has bounced back after the severe blow of Covid-19 and this is obvious from investor interest in Ola, Rapido, Chalo among others. Since July this year, Ola had raked in over $1.1 billion in equity and debt. Rapido had raised $52 million in August whereas Chalo raised $40 million in October.