For the past 30 days, SoftBank was evaluating India's two food tech majors, Zomato and Swiggy for a possible investment.
After separate calls with Zomato founder Deepinder Goyal and Swiggy founder Sriharsha Majety last week, SoftBank founder Masayoshi Son has finally made up his mind.
It will invest $450-$500 million in Swiggy at a post-money valuation of close to $5.5 billion, sources told Moneycontrol.
Both SoftBank and Swiggy declined to comment when contacted for this story.
Sources also told Moneycontrol that this investment would require CCI's approval.
The investment from SoftBank will come on top of $800 million series J round that Swiggy recently closed, with Falcon Edge, Amansa, Think Investments, Carmignac and Goldman Sachs at a valuation of $5 billion.
Swiggy's over $1.2 billion fund raise will give it significant firepower at a time when rival Zomato is looking to hit the primary market.
SoftBank's interest in the Indian food tech space is not new. For years, there has been speculation on whether it will go with Zomato or Swiggy. Zomato seemed to have an edge a few years ago after it acquired UberEats, which gave SoftBank's portfolio company Uber, a stake in the merged entity. In fact, Alibaba's Ant Financial, which is another early bet of Masayoshi Son, is also an investor in Zomato.
"There were a couple of factors that finally swung the deal in favour of Swiggy. It had a more diversified offering compared to Zomato, with its InstaMart grocery business. It would also be a more formidable cap table, as Swiggy already has funds like Prosus as investors," a person familiar with the development said.
While Zomato is focused on the food delivery segment, Swiggy is also betting big on its hyperlocal delivery service Swiggy Genie, where it competes with Dunzo, Flipkart and its online grocery service Swiggy InstaMart, where it's up against players such as Flipkart, Amazon, BigBasket, JioMart, and Grofers. While its Genie service is live in over 65 cities, grocery delivery started with Gurgaon and Bengaluru.
Interestingly, Sumer Juneja, who currently leads investments for SoftBank in India, used to be on the board of Swiggy a few years ago when he was with Norwest Venture Partners, is one of Swiggy's early investors.
SoftBank's bet on the hyper local delivery space in India also comes at a time when it has seen huge success in global investments such as DoorDash. Its $680 million investment in DoorDash was worth $11.5 billion, when DoorDash went public in December last year.
The development also comes at a time when Zomato is inching closer to a public listing in India. Recent company filings show that it has converted from a private entity to a public limited company, with reports that it will file its Draft Red Herring Prospectus (DRHP) next week.
SoftBank, which recently led a $300 million round in Meesho last week, is reportedly in talks for a few other big-ticket deals. Tech Crunch reported that it is also closing a $250 million round in fintech startup Zeta soon.