Swiggy re-evaluating investment in Rapido on potential conflict of interest

New Delhi: Food delivery major Swiggy, which owns Instamart, on Thursday said it is "actively re-evaluating" its investment in Rapido, as a potential conflict of interest may arise due to the latter's intention of entering the food delivery space.

"Rapido, one of our investee companies, has announced its intention to enter the Food delivery space. Having scaled up from a bike-taxi player to a full-fledged mobility platform, Rapido is now the largest mobility player in India by rides and has been a disruptor in its space."

"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," Swiggy said in a letter to shareholders.

"Our approximately 12 per cent minority stake has appreciated significantly since our investment (basis incoming interest), and we are actively re-evaluating our investment due to the above developments." On Thursday, the company reported a widening of its loss on a consolidated basis at Rs 1,197 crore for the first quarter ended June 30 against a loss of Rs 611 crore during the corresponding period a year ago.

"Food delivery continues to attract new competition, with new players or models trying to enter this high-frequency, high customer-intent category every year. The key question is what new competition will unlock for the consumer, which we are not already doing at scale. Many of the new offerings we have created (including on affordability) and will continue to roll out, will be towards ensuring that competition does not get a clear opening," Swiggy stated in the letter.

The company further said there is a new model that can unlock incremental growth in the category, and it will definitely be super agile and make sure we participate in it very quickly.

As always, an understanding of the consumer, intent to innovate, and an ability to scale with sustainable economics will matter, Swiggy stated.