Swiggy IPO [2024]: Food-delivery major secures Shareholder for potential $1.25 billion public offering

Swiggy IPO 2024: Swiggy plans to raise to Rs 3,750 crore ($450 million) in fresh capital, in addition to an offer-for-sale (OFS) component of up to Rs 6,664 crore ($800 million). The food-delivery major is also looking to raise about Rs 750 crore from anchor investors in the pre-IPO round.

Swiggy secured consent for an initial public offering of about Rs 10,414 crore ($ 1.25 billion) at an extraordinary general meeting of its shareholders on Tuesday. The food and grocery delivery company proposes to raise Rs 3,750 crore ($450 million) in fresh capital and the IPO will also include an offer-for-sale component of up to Rs 6,664 crore ($800 million), according to filings made with the Registrar of Companies.

The Bengaluru-headquartered company, which is yet to submit its draft red herring prospectus (DRHP) to the capital markets regulator, aims to also shore up its capital base through a pre-IPO funding round of about Rs 750 crore, the RoC filing revealed.

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“The company is proposing to explore fundraise by way of an initial public offer and offer its shares to the public for subscription,” Swiggy’s filing said.

Swiggy last raised $700 million in January 2022 led by US-based asset management firm Invesco, at a valuation of $10.7 billion.

Its key rival, Gurgaon-based Zomato, which recorded a successful public listing in 2021, had a market capitalization of Rs 1.63 lakh crore ($19.5 billion) at the end of trading on Thursday at the BSE.

Swiggy’s public listing plans are in keeping with the prevailing trend of new-age startups preparing to access public markets this year even as risk capital inflow gains pace across the sector.

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Among the companies lining up to float IPOs this year are Ola Electric and Awfis among others.

An extraordinary general meeting (EGM) of Swiggy’s shareholders on April 23, passed a special resolution saying “consent and approval of the shareholders of the company is hereby accorded to create, issue, offer, allot and/or transfer of its equity shares up to an aggregate of Rs 37,501 million by way of a fresh issue of equity shares and an offer for sale of such number of equity shares up to an aggregate amount of Rs 66,640 million by certain existing shareholders…,” the company’s regulatory filing revealed.

EGM resolutions

Dutch-listed Prosus is the largest investor in Swiggy with a 33% stake in the company follow by SoftBank. Other shareholders include Accel Partners, Elevation Capital, Meituan, Norwest Venture Partners, Tencent, DST Global, Qatar Investment Authority, Coatue, Alpha Wave Global, Invesco, Hillhouse Capital Group and GIC.

Swiggy’s cofounders Sriharsha Majety, Nandan Reddy, and Rahul Jaimini hold 4%, 1.6%, and 1.2% stake respectively in the company, according to data platform Tracxn.

Jaimini quit his operational role in 2020 to join another venture–Pesto Tech.

In January, ET reported that Prosus may get tagged as Swiggy’s promoter during its IPO. The investment arm of South African conglomerate Naspers has been trying to bring its holding in Swiggy to below 26% from the current 33%, but its discussions with potential investors have not been successful, so far.

Prevailing regulations in India require that a shareholder with a stake of 26% or above be termed as a promoter. In turn, there are specific restrictions on promoters selling shares after an IPO.

In the April 23 EGM, Majety and Reddy were appoint executive directors of the company. Majesty was designate as managing director and group CEO, while Reddy was named whole-time director and head of innovation.

Further, the company has also secured approval from its shareholders to increase the investment limit for foreign institutional investors (FIIs), non-resident Indians (NRIs), and Overseas Citizens of India (OCIs) to 24% of the paid-up share capital from the current 10%.

A Swiggy spokesperson did not respond to queries until press time.

Company performance

During the fiscal year ended March 2023, Swiggy reported revenue from operations of Rs 8,265 crore, a 45% jump from FY22, while its net loss also increased 15% to Rs 4,179 crore.

ET reported on April 9 that Invesco, which had led Swiggy’s $700 million round in January 2022, marked up the valuation of the company to $12.7 billion. Baron Capital – another Swiggy investor – had also increased the company’s fair value in its books to $12.1 billion last month.

As per a Reuters report, which cited an internal company document, Swiggy recorded a loss of around Rs 1,730 crore for nine months ending December 2023. During this period, the company recorded revenues of around Rs 8,490 crore.

In the same period, the main rival Zomato reported consolidated operating revenue of Rs 8,552 crore.

Besides food delivery–where industry experts estimate that Zomato has a lead– the two companies also compete in the fast-growing quick commerce segment. While Zomato owns Blinkit, Swiggy operates the Instamart service.

Source: The Economics Times