Swiggy is not known for making large strategic bets, but that is about to change as the SoftBank-backed company prepares to invest in Rapido, a bike taxi company. Swiggy and Rapido have been in talks for a potential deal for several months, according to three people familiar with 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.
Swiggy would gain exposure to the mobility business as well as strengthen its food delivery (hyperlocal) logistics capabilities as a result of the investment. The food delivery and quick commerce company is also in late-stage discussions to raise a new $10 billion round.
According to sources, the round is expected to end in a few weeks.
Rapido’s business has recovered in the current fiscal year after being disrupted by the pandemic in FY21 (FY22). According to sources, it needs to perform approximately 10 million rides per month, with 80 percent of the volume coming from the bike taxi segment and the remaining 20 percent coming from auto and logistics (primarily food delivery).
“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.
According to sources, Ola held talks to acquire Rapido in a $500 million deal, but the talks did not result in a deal for unknown reasons.
Rapido will expand its food delivery capability and drive a significant volume of Swiggy’s food and non-food categories as a result of this agreement.
The mobility industry has recovered from the devastating impact of Covid-19, as evidenced by investor interest in Ola, Rapido, and Chalo, among others. Ola has raised over $1.1 billion in equity and debt since July of this year. In August, Rapido raised $52 million, while Chalo raised $40 million in October.
