Swiggy cashes out of Rapido with 2.5X return; Prosus, WestBridge acquire stake

Swiggy has announced the sale of its stake in Rapido for Rs 1,968 crore to MIH Investments One B.V., a Prosus group company based in the Netherlands, and Rs 431.5 crore to Setu AIF Trust and its affiliate WestBridge. With this, the foodtech major has secured Rs 2,399.5 crore, yielding over a 2.3X return on its investment made less than four years ago.

The deal involves the transfer of 10 equity shares and 1,99,948 Series D Compulsorily Convertible Preference Shares held by Swiggy in Roppen Transportation Services Private Limited, the parent company of Rapido.

Swiggy invested about $120 million (Rs 1,020 crore) in Rapido in 2022 and holds a 12% stake in the company. Notably, WestBridge, which acquired Swiggy’s stake in Rapido, is the largest stakeholder in the company.

This divestment is a strategic move by Swiggy to realize investment value for the benefit of the company and its shareholders. The transaction is subject to customary conditions, including approvals from the Competition Commission of India and Swiggy’s shareholders.

This move comes as Swiggy looks to optimize its portfolio amid intensifying competition and financial pressures, while Rapido continues to grow, recently expanding into the food delivery business. Swiggy’s decision to sell its stake appears primarily aimed at avoiding conflicts of interest.

Meanwhile, Swiggy board has approved the sale and transfer of its quick commerce business, Instamart, to Swiggy Instamart Private Limited., an indirect wholly owned subsidiary, through a slump sale.

According to Swiggy, the move will create a focused and strategically aligned entity for Instamart’s long-term growth. The consideration will be a lump sum cash payment based on the book value of assets and liabilities at the effective date.

Swiggy’s move is similar to Zomato, which runs Blinkit as a separate subsidiary competing with Instamart in quick commerce. Creating a distinct entity gives Swiggy more focus, flexibility and room for future fundraising in this capital-intensive segment.

Recently, JM Financial advised that Swiggy should raise at least $500 million (around Rs 4,400 crore) to fund its growth and ease liquidity pressures. The brokerage cautioned that delaying the fundraise could be difficult if operational or competitive challenges weaken the balance sheet further.

Update: The earlier version of the story stated that Swiggy received a 2.35x return on its Rapido investment; however, the actual return is 2.5x. The difference is due to the variation in the dollar exchange rate.