Uber-rival Rapido doubles valuation to $2.3B following Swiggy stake sale

Rapido, a prominent ride-hailing service in India, has achieved a significant milestone by doubling its valuation to $2.3 billion, bolstered by a secondary share sale executed by the food delivery formidable, Swiggy. This sale occurred only weeks after Rapido commenced testing its food delivery service, venturing into Swiggy’s core market.

Swiggy divested its entire 12% stake in Rapido for about ₹24 billion (approximately $270 million) through two distinct transactions, as outlined in regulatory disclosures. Of this stake, around 10% was acquired by Prosus for ₹19.68 billion (approximately $222 million), while WestBridge Capital purchased the remaining stake for ₹4.31 billion (roughly $49 million), as revealed in filings following Swiggy’s recent board assembly.

The Dutch investment entity Prosus is already known for its support of both Swiggy and Rapido and holds the position of the largest shareholder in Swiggy.

The recent stock sale values Rapido at more than double its valuation of $1.1 billion from September 2024, a figure that the company’s CEO confirmed to TechCrunch.

In August, Rapido initiated a pilot program in Bengaluru for food deliveries through its subsidiary, Ownly. This marked the company’s first foray into a sector long ruled by Swiggy and its main competitor, Zomato. Co-founder and CEO Aravind Sanka confirmed to TechCrunch that the pilot began in three neighborhoods of the city.

Rapido’s entrance into the food delivery space comes over three years after Swiggy supported the startup with a notable $180 million funding round in April 2022.

Previously, Rapido collaborated with Swiggy as a last-mile delivery service, aiding in fulfilling orders on the platform. This partnership provided Rapido with valuable insights into customer preferences and the operational hurdles faced by restaurants on Swiggy, including the commissions necessary for handling orders, as informed by a source familiar with the situation who spoke to TechCrunch.

Earlier this year, Swiggy indicated the possibility of selling its stake in Rapido. In a letter addressed to shareholders in July, the company mentioned reevaluating its stake in light of a potential conflict of interest, coinciding with Rapido’s ambition to enter the food delivery sector. Swiggy co-founder and CEO Sriharsha Majety noted during a July earnings call that there had been discussions about a collaboration with Rapido, which unfortunately did not come to fruition.

“Regrettably, that didn’t materialize, and Rapido opted to pursue its own food delivery business,” Majety informed investors on the call.

At this point, it remains uncertain if Rapido’s nascent food delivery operations will impact established players like Swiggy and Zomato.

The move is anticipated to compel existing companies to reduce their commission rates to preserve their relationships with restaurant partners. However, a recent update concerning Goods and Services Tax (GST) by the Indian government could impose limits on pricing strategies, introducing a flat 18% tax on online food deliveries, which may lessen the effectiveness of cost-based competition.

In any case, Rapido has already established itself as a formidable competitor in India’s ride-hailing sector. Uber’s CEO, Dara Khosrowshahi, has described Rapido as Uber’s toughest rival in India, overshadowing the SoftBank-backed Ola.

While Rapido makes its entry into food delivery, Swiggy continues to enhance its instant commerce division. This competitive market offers rapid grocery and item deliveries in under an hour. Recently, Swiggy announced the establishment of a step-down subsidiary for its rapidly expanding quick commerce segment, Instamart. This strategy may reinforce its standing in the competitive quick commerce landscape in India, which includes competitors like Zomato’s Blinkit, Flipkart, and Amazon. The new structure could also facilitate a potential spin-off or an independent fundraising endeavor for Instamart in the future.

Instamart has shown vigorous growth, with its gross order value soaring 82% to ₹146.83 billion ($1.7 billion) in FY25 (PDF) — nearly one-third of Swiggy’s total B2C orders. Additionally, Instamart’s revenue more than doubled to ₹22.52 billion ($254 million), surpassing the core food delivery segment, which noted a growth of only 16.4% in order value and 83% in revenue.