Swiggy wants to sell entire stake in Rapido for ₹2,500cr
What's the story
Swiggy, a leading food and grocery delivery platform, is looking to sell its 12% stake in ride-hailing start-up Rapido. The company hopes to raise up to ₹2,500 crore ($300 million) from the sale. This would be a complete exit from its investment made in April 2022. The deal would value Rapido at $2.7-3 billion (₹23,000-26,000 crore), significantly higher than last year's valuation of $1.1 billion.
Financial strain
Swiggy's financial struggles
Swiggy has been under pressure with losses widening for five straight quarters. The company recorded net losses of ₹2,278 crore in the last two quarters alone. Its total losses over nine quarters have exceeded ₹6,600 crore, draining its cash reserves. As of Q1 FY26, Swiggy had cash and equivalents worth ₹5,354 crore. A successful exit from Rapido would significantly boost this figure.
Strategic move
Strategic shift in investment approach
Swiggy's investment in Rapido, which offers rides on two-wheelers, three-wheelers, and four-wheelers, was a strategic decision in April 2022. However, the company is now considering options to monetize its stake due to a potential conflict of interest as Rapido plans to enter the food delivery business. "Our ~12% minority stake has appreciated significantly since our investment... we are actively re-evaluating our investment due to the above developments," Swiggy said in its letter to shareholders.
Investment return
Potential windfall for Swiggy
If Swiggy finds large institutional buyers at the proposed valuation, it would make a 2.5x return on its three-year-old investment of $120 million (around ₹950 crore) in Rapido. Back in 2022, when Swiggy led Rapido's $180 million funding round, the ride-hailing company's valuation was pegged at $827 million. In July 2024, after raising funds from WestBridge and others, this valuation rose to $1.1 billion.
Growth trajectory
Rapid growth and valuation boost for Rapido
In the past year, Rapido's business has grown by around 120%, taking its annualized gross merchandise value (GMV) to around $2.2 billion. This rapid growth has led Swiggy to value Rapido at roughly $2.7-3 billion, a 2.5x increase in valuation in just a year. Unlike typical secondary transactions that occur at a discount of 20-30%, Rapido is being valued at 1.3 times its GMV due to its scale and dominance in the ride-hailing space ahead of Uber and Ola.