Swiggy in advanced talks to raise $ 700-800 million to build a war chest ahead of proposed Zomato IPO

New Delhi: Restaurant aggregator Swiggy in advanced talks to raise $ 700 million to $ 800 million funding round led by sovereign wealth funds Qatar Investment Authority with participation from Singapore GIC as well as global alternative asset manager Falcon Edge , the Economic time mentioned in a report citing several people with knowledge of development. Some other new and existing investors may also join the fundraiser, people familiar with the matter told the Daily.

If successful, the valuation of the Bengaluru-based food ordering platform could reach around $ 5 billion. The post-monetary valuation includes the principal capital raised by the company as part of the current funding cycle.

It’s worth mentioning here that Swiggy closed its previous funding round at around $ 3.7 billion when it raised $ 158 million, led by its largest funder Naspers in February 2020.

Industry experts say the latest fundraiser by the Bengaluru-based startup is an effort to build its war chest, as rival Zomato is expected to go public in the coming months. According to yesterday AND report, Zomato increased its paid-up capital by issuing 8.8 billion fresh shares in a pre-IPO move. It also announced in its Jan. 27 edition that the food delivery and restaurant discovery app was finalizing a $ 500 million pre-IPO cycle, which would set it worth around $ 5.5 billion, and commissioned them. investment banks Goldman Sachs, Morgan Stanley, Credit Suisse and Kotak Mahindra Bank to handle the problem.

According to Swiggy executives, the company’s food ordering activity will show a full recovery in gross value of goods (GMV) during the first quarter of 2021, while other activities such as hyperlocal deliveries will see a full recovery. also develop during the Covid period. Additionally, the business has become more capital efficient, reducing rebates and finding a better fit with restaurants that have suffered a massive disruption in their restaurant business due to the pandemic, they say.

“The need for cash has decreased very significantly,” Sriharsha Majety, CEO of Swiggy, said during a panel discussion with AND last month. “In the food delivery business, we have significantly accelerated profitability, and in other new initiatives, we will continue to reduce and invest.”

Online food ordering, like much of e-commerce in India, faced massive upheaval when the government announced the nationwide lockdown at the end of March 2020. However, the government declaring delivery of food as an essential service, players such as Swiggy and Zomato were able to launch their business.

At the same time, however, restaurant closures, coupled with ever-changing local regulations, meant both businesses faced serious disruption to their services in the first weeks of the lockdown. In September 2020, Zomato said its food ordering business had recovered in terms of GMV to 85% of pre-Covid levels.

At the end of 2020, Swiggy and Zomato were reporting a sharp increase in demand. The two companies said they recorded the highest daily order levels on December 31, bolstering restaurants that had otherwise seen a drop in restaurant customers due to local curfews implemented in many. many states.