MUMBAI: Swiggy’s upcoming funding round will include an estimated $300 million worth of secondary share sales by some key backers, said people aware of the developments, making for one of the largest liquidity events for growth-stage investors in India’s startup ecosystem.
The size of the investment round, which is expected to value Swiggy at $2.5-3 billion, has ballooned to about $900 million on the back of unprecedented investor interest in India’s largest online food-delivery platform.
Bessemer Venture Partners, Norwest Venture Partners, Accel and SAIF Partners are expected to sell a part of their stakes in the four-year-old company, sources said. Together, they own about 39% of Swiggy, as per documents sourced from Tracxn. Swiggy’s earliest investors, RB Investments and Harmony Partners, will exit completely, entirely selling their cumulative 3% stake.
Norwest, which has put in about $20 million in Swiggy since 2015, is expected to rake in $80 million through a partial stake sale, said the people familiar with the negotiations. Details on the other secondary deals could not be ascertained. Naspers, the largest shareholder in Swiggy with a 23.3% stake, may see its holding increase to about 40% by investing over half the corpus through a mix of primary and secondary share purchases, sources said. We-Chat owner Tencent, in which Naspers holds a 31% stake, is expected to invest $50-100 million.
Existing investors Meituan Dianping, Coatue Management and DST Global are also expected to participate in this funding round, which ET was the first to report in September.
The secondary share sale is likely to be made at a discount to the $2.5 billion valuation being negotiated for the primary investment, said one of the persons aware of the discussions. ET could not immediately verify the final valuation at which the secondary transactions will be executed.
Swiggy did not respond to ET’s email queries. A spokesperson for Naspers said: “It is the company’s policy to neither acknowledge nor deny its involvement in any merger, acquisition or divestiture activity nor to comment on market rumours.”
Accel declined to comment citing unavailability of its spokesperson. Norwest, Bessemer, RB Investments, Harmony Partners, and SAIF Partners did not immediately respond to ET’s queries.
The size and timing of the secondary share sale marks a significant shift in India’s startup ecosystem, where growth-stage investors typically have to wait for long periods to garner sizeable exits. Flipkart and Ola saw their first major liquidity events only after seven to eight years, in 2014 and 2018, respectively.
If Swiggy’s fundraise is concluded by December, it would be the company’s third this year. Swiggy has raised over $465 million so far, with its previous fundraise in June valuing the company at $1.3 billion.
In a recent interview with ET, Naspers Ventures CEO Larry Illg said Swiggy was the market leader in India’s food delivery sector, and that it was 36% larger than its closest competitor in terms of order numbers. He also said Swiggy had a higher average order value that placed it 64% ahead of competition in terms of gross merchandise volume-—proxy for gross sales.
Swiggy ended October with about 22 million orders in absolute terms, according to sources. Rival Zomato said it hit a monthly order run rate of 21 million as of September, implying that the firm saw its highest daily order volume during the month touch 700,000 orders each day of the week. To be sure, order run rate is not the absolute order volume but helps project future order volume for the month, and is calculated based on one week’s volume (in this case, the highest week during September).
The development was reported by retail.economictimes.indiatimes.com