Thursday, April 25

Coatue Management to Invest $50-100 Mn in Swiggy

Coatue Management one of the world’s best performing technology hedge funds, is in discussion to invest $50-100 million in Swiggy, the online food-delivery in partnership with a few additional investors.

This will be the second investment in two months for the food delivery app after South African Naspers and Meityan-Dianping, the Chinese e-commerce. This states how rapid the current Indian digital market is evolving, especially in terms of investment.

Swiggy possessed a valuation of $700 million when they received their last investment and the Chinese online-to-offline service platform Meituan-Dianping is set to invest in the company again along with Coatue and two unknown investors. Meituan-Dianping is set to invest an additional $40 Mn in Swiggy.

Reports cannot confirm whether this round of investment is related to the previous round of funds or a new one. Swiggy is only gearing up to the tough competition they will face in the coming months as their market will witness the entries of two reputable companies in the name of Ola and UberEats as well as Zomato who recently received funding from Ant Financial.

Swiggy is a daughter company of Bundl Technologies and is its parent company’s fastest grower in terms of revenue in the fiscal year 2016-17 as revenues grew by six times an increase in loss by 50% to INR 205 crore.

Coatue Management is an American hedge fund based in New York with particular focus on technology. It is managed by Philippe Laffront who was the former executive of Tiger Management and owns over $15 billion in assets under management.

Coatue is showing interest in investing in India due to the penetration of affordable data, which will help deepen customer acquisition.

In 2015, Coatue invested in online classifieds website Quickr for a small stake. The hedge fund is also an investor in Meituan-Dianping, which counts Tencent as its lead investor.

The hedge fund invested heavily in sectors such as ride-hailing owning stakes in companies such as Grab in Southeast Asia, Didi Chuxing in China and Lyft in US.

However, Swiggy is still lagging behind Zomato in the online food delivery market in terms of investment. Indeed their competitor was able to raise $150 million from Ant Financial last month in a funding round that sent the valuation of their company flying to $1.1 billion.

Swiggy has been a fierce competitor in that segment however, with over 4.5 million orders registered every month that allowed them to duel Gurugam-based Zomato over the past few months. The latter recently asserted that its food-ordering business has expanded significantly to almost 40% of its revenues.

Indeed, Zomato has considerably increased its revenues since launching Zomato Gold three months earlier. The subscription service now accounts for almost 12% of its revenues and the company recently released an annualized revenue run rate of $100 million.

However, several huge competitors in the likes of Ola – strong from acquiring Foodpanda India, UberEats and Google Areo making it a five-way battle in one market. But the market size of online food delivery has substantially expanded over the last years. A report from RedSeer states that daily order volume was inflating at a rate of 2 lakh daily in 2016 and 4.5 lakh daily in 2017.