Swiggy Raised a Sum of $1.25 Billion via Its Two-tranche Financial Round; How will it be Beneficial for Investors?

After a few years of consideration, SoftBank, a Japanese investment company, has decided to invest in India’s food delivery market. Swiggy revealed a few days back that it had secured $1.25 billion in funding from SoftBank Vision Fund 2 and Prosus, marking a Series J financing round. 

This includes the $800 million investment announced to employees earlier this year. SoftBank was solely responsible for investing $450 million in this new round, which was highly popular. Swiggy, a six-year-old food delivery startup based in Bangalore, has a post-money valuation of $5.5 billion.

In mid-April, TechCrunch reported that Swiggy had collaborated with SoftBank and proposed a valuation of $5.5 billion. SoftBank, Qatar Investment Authority, Amana Capital, Goldman Sachs, Falcon Edge Capital, Think Investment, Carmiganc, and other investors participated. Swiggy claims the new financing round demonstrates its turnaround in the past few quarters despite the pandemic.

Key Highlights Of Swiggy raised a sum of $1.25 billion via its Two-Tranche Financial Round

Swiggy has been experiencing tremendous growth in recent years as an unlisted company. Investors were leveraging  Swiggy unlisted shares. The company’s expansion into grocery delivery and pickup and drop services has resulted in a 30% increase in orders processed compared to pre-COVID. Sriharsha Majety, the CEO, expresses gratitude towards visionary global investors who have supported the company’s mission to create a long-lasting and iconic brand in India.

As India’s food delivery market is vast, Swiggy intends to continue investing highly in this category over the coming years. However, the CEO also states the importance of their non-food business, which has shown significant growth and consumer love during the pandemic. Swiggy sees this as a unique and good opportunity over the next 10 to 15 years as India’s middle-class family expands and the target segment for convenience grows to 500 million users. 

This investment comes when Indian startups are raising record capital, with a few mature companies exploring public markets. Also, Zomato, Swiggy’s main competitor in India, raised $1.3 billion in its initial public offering last week. At the same time, financial services startups Paytm and MobiKwik have also filed for their initial public offerings.

India’s food delivery market is highly contested, with multiple players vying for the top spot. According to analysts at Bernstein, this market is expected to grow to a staggering $12 billion by 2022. One of the newer entrants into the market is Amazon, which currently operates in limited parts of Bangalore. However, Zomato executives are not too worried about Amazon’s impact on the market share for now. SoftBank, a regular investor in the Indian startup ecosystem, has directly placed its bet on Zomato, marking its first foray into the food delivery space. While SoftBank has invested in several food delivery startups globally, Prosus, an early investor in Swiggy, has also backed several food delivery startups around the world.

Few Benefits For Investors By Swiggy Raised Two-Tranche Financial Round

 Swiggy unlisted shares offer numerous benefits to investors, which are outlined below.

1. High-Value Investments

When shares lack liquidity, they can stay undervalued or overvalued for long. As a result, buying Swiggy shares can potentially lead to significant returns on investment for investors. 

 2. Diversification Of Risk

Investing in unlisted equity shares is a unique asset class that can diversify risk for investors who heavily focus on listed equity markets. As a result, Swiggy shares offer an opportunity for such diversification.

3. High Growth Investments 

Small, unlisted companies may need the ability to go public and obtain the necessary funds for their capital requirements. Therefore, investing during their early stages and continuing to invest as they grow and eventually list on equity markets can result in significant returns due to the small base effect. Example: Swiggy was a small company at the start, but now it has become the biggest.

4. Negotiable Share Prices

If you’re interested in purchasing unlisted shares, one potential benefit is the opportunity to negotiate the price. Due to the limited number of buyers and sellers, and a smaller pool of companies offering these shares, there is less competition. This makes it more likely that you’ll be able to negotiate a favourable price. For instance, Swiggy began as a small company but has become a significant brand.

Final Word

Investors who have invested in Swiggy are currently experiencing high returns due to the company’s rapid growth. Swiggy is expected to continue its growth trajectory in the coming years, which presents a favourable investment opportunity for those seeking further growth potential.