Rapido Achieves $2.3B Valuation Boost After Swiggy Stake Sale
Rapido, a prominent ride-hailing service in India, has seen its valuation soar to $2.3 billion following a significant secondary share sale by food delivery giant Swiggy. This development comes shortly after Rapido initiated a pilot program for food deliveries, marking its entry into a market traditionally dominated by Swiggy. The sale involved Swiggy divesting its entire 12% stake in Rapido, raising questions about the competitive landscape as both companies navigate overlapping business interests.
Swiggy’s Strategic Stake Sale
Swiggy has sold its complete 12% stake in Rapido for ₹24 billion (approximately $270 million) through two separate transactions. Regulatory filings reveal that Prosus, a Dutch investment group and a major backer of both companies, acquired around 10% of the stake for ₹19.68 billion (about $222 million). The remaining stake was purchased by WestBridge Capital for ₹4.31 billion (around $49 million). This share sale significantly boosts Rapido’s valuation, which has more than doubled from $1.1 billion in September 2024, a figure confirmed by Rapido’s CEO to TechCrunch.
The timing of this sale is noteworthy, as it follows Rapido’s recent foray into food delivery services in Bengaluru. The pilot program, launched through its subsidiary Ownly, began in three neighborhoods and represents a strategic move into a sector where Swiggy and its rival Zomato have long held sway. This shift comes over three years after Swiggy initially supported Rapido with a $180 million funding round in April 2022.
Implications of Rapido’s Food Delivery Venture
Rapido’s entry into the food delivery market raises questions about its potential impact on established players like Swiggy and Zomato. Swiggy had previously hinted at selling its stake in Rapido, citing a possible conflict of interest as Rapido prepared to launch its food delivery services. In a letter to shareholders, Swiggy indicated it was reassessing its investment in Rapido, and during a July earnings call, co-founder and CEO Sriharsha Majety noted that discussions about collaboration in food delivery had not materialized.
As Rapido begins to carve out its niche in food delivery, it remains uncertain how this will affect the competitive dynamics in the industry. The entry of a new player could pressure existing companies to lower their commission rates to retain restaurant partners. However, recent changes in the Goods and Services Tax (GST) structure, which now imposes a flat 18% tax on online food deliveries, may limit pricing flexibility for all players in the market.
Swiggy’s Focus on Quick Commerce
While Rapido expands into food delivery, Swiggy is simultaneously enhancing its instant commerce business, which focuses on rapid delivery of groceries and other items. The company has recently established a step-down subsidiary for its quick commerce arm, Instamart, which has emerged as Swiggy’s fastest-growing segment. This strategic move could bolster Swiggy’s position in the competitive quick commerce market, which includes rivals like Zomato’s Blinkit, Flipkart, and Amazon.
Instamart has shown remarkable growth, with its gross order value skyrocketing by 82% to ₹146.83 billion ($1.7 billion) in FY25, accounting for nearly a third of Swiggy’s total B2C orders. Additionally, Instamart’s revenue more than doubled to ₹22.52 billion ($254 million), significantly outpacing the core food delivery segment, which experienced a 16.4% increase in order value and an 83% rise in revenue.
Future Outlook for Rapido and Swiggy
As Rapido ventures into food delivery, it faces the challenge of establishing itself in a market dominated by established players. The competitive landscape is evolving, and it remains to be seen how Rapido’s new services will influence the strategies of incumbents like Swiggy and Zomato. The potential for increased competition may lead to changes in pricing strategies and service offerings across the industry.
Simultaneously, Swiggy’s focus on expanding its quick commerce capabilities indicates its commitment to maintaining a stronghold in the rapidly changing delivery landscape. With both companies exploring new avenues for growth, the coming months will be crucial in determining their respective trajectories in the Indian market.
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