China’s Tencent in talks to invest in India’s Swiggy in an upto US$700m funding

ASIA – Tencent, the Chinese investment company has joined several investors who want to invest in India’s food delivery platform Swiggy which is seeking to raise US$500-700 million.

According to ET Retail, the talks which involve several existing and new investors may see an investment that could value Swiggy at US$2.5-3 billion

ET Retail had earlier reported that the firm was planning to raise up to US$500 million with valuation conversations spanning $2.2-2.5 billion and was offered at least one term-sheet with an estimated valuation of $2.5 billion in July.

People familiar with the matter said that interests to invest in Swiggy were shown by existing backers such as Naspers and talks are ongoing on the investment size and valuation.

“The funding size under discussion is around $650 million, with Naspers looking to invest $200-250 million,” one of the persons said.

“However, the talks are yet to take definite shape and will take another 3-4 weeks to crystallise.”

Reports have it that Swiggy had initiated talks with Japan’s soft bank for a sizeable investment since November and it is not clear if it is participating in the new round of fundraising.

Those expected to participate include China’s Meituan Dianping, US-based hedge fund Coatue Management and Russia’s DST Global, General Atlantic and Chinese hedge funds Tybourne Capital and Hillhouse Capital.

The people also noted that some of Swiggy’s early investors could sell some of their shares in the company.

This could mark third round of funding by Swiggy this year and so far it has raised US$310 million, having carried out its latest fundraising in June that valued it at US$1.3 billion.

Gearing for competition

Swiggy is seeking for investments as competition in the online retail space heightens, especially from Zomato which has been spending on discounts and cashbacks to bump up order volumes.

Both the firms have raised capital in response to growing monthly cash-burn rates, all meaning to create new habits on online ordering, especially in tier 2 cities and beyond.

Zomato said it crossed monthly order volume of 10.5 million as of June, while industry members say it crossed 12 million orders in August in India.

On the other hand, UberEats and Foodpanda handle over 3 million and 1.5 million monthly orders, respectively, in India.

Experts said growing investor interest in Swiggy comes on the back of a meteoric rise in its volume growth, with industry insiders pegging its monthly order volume at over 19 million in India last month.

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