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Prosus, one of the largest technology investors globally, is in talks to buy a 5% stake in Rapido, which has become the second-largest cab-hailing platform in the country, three people with direct knowledge of the matter told YourStory.

The deal, expected to be a fully secondary transaction, is likely to happen at a flat valuation of $1 billion, the sources said, requesting anonymity. Rapdio’s early investors, including AdvantEdge and a few angel investors, will be looking to offload some stake, the sources added. 

Although the details are still being finalised, Prosus has begun its due diligence process, according to the sources. A 5-10% stake would result in an investment of around $50 million by Prosus.

“Rapido has broken the duopoly of Ola and Uber in India and that’s what drew Prosus’ interest. They are going behind companies that are seemingly doing well and are possibly public market candidates,” said one of the sources.

Both Prosus and Rapido declined to comment.

The deal deliberations come on the heels of Rapido overtaking SoftBank-backed Ola as the second-largest ride-hailing platform in the country, The CapTable had earlier reported. Aravind Sanka, Rapdio’s Co-founder and CEO, went beyond and told YourStory in an interview last month that Rapido has emerged as the biggest player in India with 2.5 million rides a day.

Sanka also told YourStory he expected Rapido will turn cash flow positive for the October-December quarter. He also said the company had cut its FY24 losses by half while doubling its gross merchandise value. 

In September, Rapido secured $200 million in funding from a group of investors, including WestBridge Capital and Nexus Venture Partners, at a unicorn valuation. The company plans to use the new capital to expand its operations nationwide and enhance its technology platform for improved service delivery. Rapido also aims to grow its offerings across multiple categories, such as three-wheelers, taxis, and bike-taxis.

Founded in 2015 as a bike-taxi platform, Rapido has grown into a comprehensive ride-hailing service. To date, the company has raised over $500 million in private market investments from various investors, including IPO-bound Swiggy. Prosus is also the largest shareholder in Swiggy. 

Prosus’ interest in acquiring a stake in Rapido comes as the Netherlands-based investor, which has invested over $2.5 billion in India, shifts focus to seemingly promising startups. This follows significant losses in two of its largest investments—BYJU’S and Pharmeasy. Earlier this week, YourStory reported that Prosus was considering increasing its stake in Urban Company with a $30 million investment.

Prosus, one of India’s most aggressive technology investors, is poised for substantial returns when Swiggy goes public, with the food delivery platform expected to reach a valuation of $12-15 billion. Prosus, which holds over 30% stake in Swiggy, is reducing its stake to 24.9% through the IPO to avoid being classified as Swiggy’s promoter.

In addition to tech investments, Prosus is diversifying its portfolio. In September, it invested $100 million in Vastu Housing Finance and is also planning to invest around $40 million in the jewellery platform Bluestone.