Online food delivery startup Swiggy is preparing to raise at least $800 million (roughly Rs 6,000 crore) in an initial public offering (IPO) early next year, Nikkei reported on Tuesday, 22 February, citing three people familiar with the matter.
This comes even as its main rival Zomato Ltd saw its shares tank after a stellar market debut last year, due to lukewarm order value growth in the third quarter.
Swiggy is also inviting bids from drone service providers for drone delivery of groceries and other essential items for an initial period of six months, according to the company's LinkedIn post.
Here’s a look at what the delivery company has in the works.
Drone Delivery Soon?
"We are excited to invite bidders for drones as a service, to help us execute drone delivery for grocery and essential items in several cities for a period of six months - a duration that may be amended from time to time," wrote Swiggy in a LinkedIn post on Tuesday.
Reports suggest that drone service will be middle-mile only and will be rolled out in Bengaluru, Hyderabad, Mumbai, Delhi-NCR, and Goa, to begin with, according to Indian Transport and Logistics News.
Middle-mile means warehouse-to-shop or shop-to-shop. For instance, if a Swiggy InstaMart runs out of a certain product, drones will quickly be able to restock from other InstaMarts or warehouses. Swiggy isn't immediately planning to deliver straight to customers' doorsteps.
The delivery company has posted a request for proposal (RFP) for the drone services, which can be accessed after signing a non-disclosure agreement (NDA). Bids must be submitted by 2 March.
It's worth noting that in December 2021 Swiggy said it will invest $700 million in its express grocery delivery service Instamart, which is in direct competition with services like Dunzo and BigBasket.
As much as 25 percent of the company's overall revenue reportedly comes from its non-food delivery business, which it is planning to invest heavily in.
In December 2021, Swiggy and integrated airspace company ANRA Technologies had collaborated to conducted over 300 drone-led deliveries of food and medicines, Mint reported.
The companies said it was the first such trial in India.
This was part of a project awarded to certain companies by the Directorate General of Civil Aviation (DGCA) and Ministry of Civil Aviation to help prepare for a new set of drone rules for Beyond Visual Line of Sight (BVLOS) operations.
BVLOS are missions where the drones go outside the visual range of the pilot, thus relying more heavily on navigation technology and mapping.
Drone deliveries came under the limelight when Amazon in 2013 announced an experiment to deliver lightweight commercial products via unmanned aerial vehicles (UAVs). There are several major players in the US now, including FedEx, United Parcel Service, Boeing, and DHL.
Floating an IPO in Rough Seas
Swiggy is preparing for an IPO in a climate where the stock market has tanked after climbing high in 2021. Indian startups that were popular when they went public have seen a dive in stock prices.
"Swiggy has started preparing for a public listing, beginning with adding independent directors to the board, which in itself will take a few months. They are likely to list early next year," a source told Nikkei.
Since October, Zomato's shares have slumped 41 percent, Paytm shares are trading at under half its list price, Nykaa's shares have slumped 33 percent, and Policybazaar's have fallen 36 percent.
However, Swiggy is reportedly confident since it's planning to position itself as a logistics company, not just a food delivery firm, to keep investors interested.
This lines up with its plans to shift focus to its hyperlocal delivery service InstaMart, subscription-based morning essentials delivery business Supr Daily, and pick-up and drop service for all types of parcels, called Genie.
India has seen an increasing demand for food and grocery delivery, especially during the pandemic.
Swiggy has raised around $3.3 billion since it set up shop in 2014, from marquee investors including SoftBank, Prosus Ventures, Invesco, and Accel Partners. After it raised $700 million earlier this year, its valuation nearly doubled; from $5.5 billion to $10.7 billion.
Zomato, in comparison, is valued at around $9 billion.
(With inputs from Mint, ITLN, The Economic Times, and Nikkei)