A Swiggy IPO could provide good returns, says SoftBank's Masayoshi Son

Last month, Swiggy closed a $1.25-bn fundraise, marking the first investment in the category by SoftBank Vision Fund 2, and raising its valuation by more than 50% to $5.5 bn

Zomato’s stellar listing and a strong performance on the Indian bourses has given SoftBank’s founder Masayoshi Son confidence that Swiggy will be able to deliver ‘good returns’ it its goes for listing.

“If they go public, I believe that we will be able to see good returns from here too. That's our expectation,” said Son on Tuesday in post earnings call with analysts.

Last month, Swiggy closed a $1.25-billion fundraise, marking the first investment in the category by SoftBank Vision Fund 2. This took the valuation of the Bengaluru-based startup up by more than 50 per cent to $5.5 billion from $3.6 billion earlier, according to industry sources. SoftBank has invested around $360 million to $450 million in this round into Swiggy (JPY).

Other than comparing to Zomato, Son also referred to some of SoftBank’s other investment in the footech segments like the US-listed DoorDash and Uber Eats. He compared the competition between DoorDash and Uber Eats to Zomato and Swiggy. “Swiggy and Zomato, these are the two competitors and they are taking about 50:50 market share and we have invested in Swiggy. They are one of the largest scale delivery platform in India with 20 million active users,” said Son.

Son further stated that Swiggy has 120,000 partner restaurants and it has 1.5 million orders per day with 200,000 number of drivers. So they are again making a rapid increase or growth. Recently, not only the food delivery, but they are also delivering the other goods too. “Number of orders per day has increased by about 2.5 times in one year, revenue has increased by 2.8 times in one year,” he added.

According to media reports, Swiggy’s FY20 net loss jumped by 61 per cent to Rs 3,768 crore while its revenue grew by nearly 125 per cent to Rs 2,515 crore during the year.

Other than prospects of Swiggy’s listing the Japanese investment firm is also hopeful of the listing of payments company Paytm and Policybazaar. A Reuters story quoted Navneet Govil, CFO, Vision Fund on the upside they see in the listing of these two companies. “Further upside will come from listings by Indian payments firm Paytm and insurance aggregator Policybazaar as well as southeast Asian ridehailer Grab, which is due to go public via a blank-cheque company merger,” said Govil to Reuters.

From the funds perspective Son also said that Artificial Intelligence (AI) is the next big bet and SoftBank has provided 10 per cent capital raised by unlisted AI companies worldwide. From the Vision Fund 2, it has invested in 91 companies with AI capabilities with a total acquisition cost of $19.5billion.