As the Indian investments community is excited about the Zomato IPO, scheduled for tomorrow, the arch-rival Swiggy is busy preparing a bigger war chest to take on Zomato.
The Competitive Commission of India (CCI) has given approval to $450 million investment in Swiggy coming from SoftBank Vision Fund 11. The anti-monopoly watchdog of India revealed on Twitter that the proposed acquisition of the stake in Bundl Technologies – the registered entity that owns and operates Swiggy – by SVF II Songbird is approved. It’s important to mention that SVF II Songbird is a SoftBank Group entity meant to manage all investments made under SoftBank Vision II.
The approval from CCI will allow Swiggy to strengthen its market presence and accelerate its growth rate to take on IPO bound Zomato.
SoftBank Investment in Swiggy: Big Picture
- Swiggy gets $450 million investment injection from SoftBank.
- Just two months ago, the online food delivery major Swiggy raised $800 million in April from other investors led by Falcon edge, Amansa Capital, Think Investments, Carmignac and Goldman Sachs, valuing the company $5 billion.
- A total of $1.25 billion is raised by Swiggy in the last few months, creating a sizeable war chest to compete with Zomato which intends to raise a total of approx $1.23 billion (~Rs 9,000 crore) through its IPO.
- Additional shares worth approx $55 million (Rs 375 crore) would be up for grabs from existing investors. This amounts to a total of approx $1.3 billion IPO from Zomato – the second biggest after SBI Cards and Payment Services IPO, which was launched in March last year.
- The Japanese conglomerate Softbank was eyeing the fast-growing food delivery market of India for some time. It engaged both Zomato and Swiggy for the possible investment in the last 2 years.
- Swiggy’s decision to foray into the fast-growing grocery delivery business came as a tipping point and SoftBank decided to side by Swiggy.
- Both Swiggy and Zomato claims to accounts for 45% of India’s food delivery market.
- The average order value in India is estimated Rs 300/-
Food For Thought
India’s food delivery market is all set to usher in the new era after the Zomato IPO. It’s currently a two-horse race with nearly 9 out of every 10 orders are being fulfilled either by Zomato or Swiggy. As both the companies are ready with a bigger war chest, it would be interesting to see what strategy Amazon Food would employ to eat into their market. Just for context, Amazon India has also jumped into the online food delivery business in India early last year. The company is constantly expanding its reach and now offerings its delivery service to 62 key locations in Bangalore – one of the largest cities in terms of revenue for online food delivery players.
The Zomato-Swiggy duopoly is being challenged by Amazon Food in its key markets now. While Zomato and Swiggy both are ready with the biggest war cheat they ever had, will it result in raining discounts for customers or CCI will have its reservations against deep discounting?