Soft­bank Vi­sion Fund looks to buy stake in Zo­mato or Swiggy

Mint Asia ST - - News - A NIRBAN S EN & S HRUTIKA V ERMA

Soft­bank

Vi­sion Fund is eval­u­at­ing In­dia’s two largest food de­liv­ery com­pa­nies—swiggy and Zo­mato—and will in­vest in one of the two, ac­cord­ing to two peo­ple fa­mil­iar with the mat­ter.

Zo­mato’s talks with Soft­bank have ad­vanced fur­ther than Swiggy’s dis­cus­sions, one of the two peo­ple cited above said, re­quest­ing anonymity as the dis­cus­sions are con­fi­den­tial. This per­son said that Zo­mato is close to rais­ing nearly $500 mil­lion in its next round.

How­ever, if Soft­bank chooses to in­vest in Swiggy, the lat­ter could also end up rais­ing at least $500 mil­lion, the peo­ple men­tioned above said. The new fund­ing round, if it goes through, may value Swiggy at more than $2 bil­lion, a 54% jump from its cur­rent val­u­a­tion of $1.3 bil­lion.

Soft­bank has been eval­u­at­ing Swiggy for nearly a year, but both par­ties failed to reach an agree­ment dur­ing Swiggy’s last two fund­ing rounds, the peo­ple said. If the talks re­sult in a deal this time, Soft­bank may be­come Swiggy’s largest share­holder.

Swiggy (Bundl Tech­nolo­gies Pvt. Ltd), In­dia’s largest food de­liv­ery startup, has al­ready raised $310 mil­lion this year from a clutch of in­vestors in­clud­ing Naspers and DST Global. Zo­mato Me­dia Pvt. Ltd, which has closed the gap with its arch-ri­val in food de­liv­ery over the past year, re­ceived $150 mil­lion in fresh cap­i­tal from Ant Small and Mi­cro Fi­nan­cial Ser­vices Group in Fe­bru­ary.

Swiggy, Zo­mato and Soft­bank de­clined to com­ment.

While both com­pa­nies are well-cap­i­talised, they need to keep rais­ing even more cash in or­der to win share in a hy­per-com­pet­i­tive mar­ket. Mint re­ported last week that Swiggy and Zo­mato are spend­ing hun­dreds of crores of ru­pees on lock­ing in de­liv­ery staff. The two com­pa­nies have also sig­nif­i­cantly in­creased spend­ing on dis­counts and de­liv­er­ies.

Swiggy and Zo­mato face com­pe­ti­tion from Uber Eats and Food­panda, the food de­liv­ery arm of Ola. Ola has said it will in­vest $200 mil­lion to ex­pand Food­panda. Uber Eats, too, is in­vest­ing hun­dreds of crores of ru­pees in ex­pand­ing its ser­vice. In May, Uber Eats was present in 13 cities, just one year af­ter its launch.

The on­line food de­liv­ery mar­ket is ex­pected to reach $4 bil­lion in 2020 from $700 mil­lion last year, ac­cord­ing to Redseer Con­sult­ing. De­liv­ery staff at star­tups such as Swiggy and Zo­mato have seen their in­comes surge in the past six months as the food de­liv­ery com­pa­nies fight an ex­pen­sive bat­tle to gain a big­ger foothold in this fast­grow­ing mar­ket. Swiggy has raised $465 mil­lion till date—the most by an on­line food de­liv­ery firm. Zo­mato has raised about $375 mil­lion.

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