In a gargantuan secondary deal that marks the shifting dynamics in the Indian food delivery market, Meituan, the Chinese e-commerce giant, has sold a slice of its stake in Swiggy to a US-based investor for more than $200 million. According to sources in the matter, confirmed that Meituan had sold a percentage of its equity holding in the Bengaluru-based food delivery company last week for an estimated $200-220 million. This strategic investment comes after the initial investments Meituan had made in Swiggy back in 2018, which were later amplified through subsequent funding rounds in 2020.
The share of Meituan sold is not revealed; however, insiders say the deal was closed at an estimated valuation of Swiggy at $10 billion. Presently, Meituan retains a 3.88% stake in Swiggy through its investment arm, Inspired Elite Investments, according to the startup intelligence platform TheKredible. This is a bigger trend, as the major shareholders of Swiggy, including the likes of Elevation Capital and Norwest, have themselves decided to dilute their holdings, with a hope to get a robust listing environment.
Swiggy, scheduled to go public within the next three weeks, has managed to draw considerable investor interest in the pre-IPO market. According to sources, the DRHP from the company indicates that it plans to raise $450 million through fresh equity issuance besides an OFS where the existing investors will be able to sell their holding. Swiggy’s performance numbers have also given a thrust to this optimism as the company reported a 36% rise in FY24 revenue at Rs 11,247 crore from the previous year’s Rs 8,265 crore. Besides, Swiggy managed to decrease net losses by 44% as it closed the year at Rs 2,350 crore in losses.
That did it; this has drawn comparisons to its rival, Zomato, which turned profitable in FY24 on the back of revenues of Rs 12,114 crore. The inclusion of rapid delivery through BlinkIt and its Hyperpure food delivery business has enhanced its valuations spectacularly, as it stands at $27.3 billion now as against $13 billion while it was raising capital through its much-scrutinized IPO process in 2021.
Such stakes sold by prominent investors continue to be watched for their effects on the public debut of companies such as Swiggy, which are geared toward their Initial Public Offering. Swiggy and Meituan did not comment on the transaction, and the updates would depend on whatever information that comes in at the moment.
