Swiggy says it is actively re-evaluating its investment in Rapido over potential conflict of interest

Sriharsha Majety, Group CEO and co-founder, Swiggy

Food and grocery delivery major Swiggy said it is actively re-evaluating its investment in Rapido, a ride hailing company that is now foraying into food delivery.

Swiggy invested in Rapido in 2022 and holds a stake of around 12 percent in the company which translates to around $120 million (about Rs 1,020 crore) at the current valuation of slightly over $1 billion (around Rs 8,500 crore).

Rapido is aiming to break the duopoly that Zomato and Swiggy have enjoyed. Under the current regime, several restaurant owners have accused Zomato and Swiggy of high commissions, preferential treatment, higher customer acquisition costs (CACs) and more. Rapido however plans to reshape the food delivery landscape, which has made companies take notice.

The Bengaluru-based company had said it is re-evaluating its approach because as Rapido scales, it may compete directly with Swiggy resulting in a potential conflict of interest.

The key question is what will new competition unlock for the consumer which we are not already doing at scale, Swiggy’s management said. “Many of the new offerings…will be towards ensuring that competition does not get a clear opening,” the shareholder letter added.

Swiggy’s around 12 percent minority stake has appreciated significantly since its investment, including incoming interest, Swiggy said.

“As a shareholder, we are extremely happy with their success and value-creation; but do acknowledge a potential conflict of interest that may arise in the future. and we are actively re-evaluating our investment due to the above developments,” it concluded.

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