Swiggy receives shareholders’ green signal for a $1.2 billion IPO

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Swiggy has received the approval from shareholders for a $1.2-billion initial public offering (IPO), according registrar of companies (RoC) filings. The foodtech player is looking to raise up to ₹3,750 crore through a fresh issue and up to ₹6,664 crore as an offer-for-sale (OFS) component, the filings showed.

The firm is also planning to raise around ₹750 crore from anchor investors ahead of its IPO. In an exclusive conversation with CNBC-TV18 on the sidelines of the Davos World Economic Forum (WEF) 2024, Swiggy Group CEO Sriharsha Majety had said an IPO is an aspiration and the company is preparing for it.

“The last two years, we have had so many great companies go out the door and we have been learning from their experiences and understanding what the market thinks of startups,” Majety noted.

Swiggy has not responded to CNBC-TV18’s queries.

A report by Entrackr had earlier said that Swiggy will file papers for its IPO by May and ultimately list around the festive season. The firm will seek valuation in the range of $12-15 billion. The report further added that IPO-bound Swiggy is reaching out to high-net-worth individuals (HNIs) to buy its shares at a 20% discount on its current valuation.

Swiggy’s investor Prosus, which owns around 32% in Swiggy, will be seen selling shares in the company as it will aim to reduce its shareholding to below 25%, Moneycontrol reported quoting data from Tracxn. SoftBank (8%), Accel (6.2%), founder group (6.7%), Elevation Capital (4.4%), Norwest, Tencent, DST Global, Alpha Wave, are some of the other investors in the company, the report showed further.

In the beginning of March, Baron Capital, a US-based fund manager, revised the value of its stake in Swiggy to $87.2 million, indicating a valuation of $12.16 billion for the hyperlocal commerce unicorn as it gears up for its upcoming IPO.

Earlier this year, Invesco, a US-based asset management company (AMC), too increased Swiggy’s valuation to $8.3 billion. In October 2023, Invesco had marked up the foodtech platform’s valuation by about 42% to about $7.85 billion.

The company’s cofounders Sriharsha Majety, Nandan Reddy and Rahul Jaimini hold 4%, 1.6% and 1.2% stake, respectively, as per Tracxn. Jaimini left his operational role in 2020 to join another venture–Pesto Tech. In EGM held on April 23, Majety and Reddy were appointed executive directors of the company. Majety was designated as managing director and group CEO, while Reddy was named whole-time director and head of innovation.

Swiggy’s food delivery business had turned profitable last year, and in 2024, Majety had told CNBC-TV18 at WEF that the focus will be on growing profitably and getting better. He pointed out that Swiggy is still at the very early stage, learning what works for consumers. “Just because you can put a category doesn’t mean the consumers want it. All of us in this space are iterating, learning from each other, learning from consumers,” he said.

Now ahead of the potential run to Dalal Street, Swiggy is trying to improve its unit economics. As per an Entrackr report, the company seems to be achieving a steady 25-30% year-on-year growth in FY24. During the first nine months of FY24, Swiggy’s revenue from operations was ₹5,476 crore, according to a document drafted by an investment banker on behalf of Swiggy, which was seen by Entrackr.

The decacorn reported ₹8,265 crore in revenue in FY23 and a collection of ₹6,623 crore in the last fiscal year. The food delivery business constituted 82.65% of the total operating revenue, amounting to ₹4,526 crore. The remaining income came from Swiggy Instamart, the firm’s quick commerce vertical, the document showed.

The company’s key focus is on turning profitable and for that it has improved its EBITDA margins which registered at -1.9% and -109.5% for the food delivery biz and Instamart, respectively during the nine-month period, compared to -17.5% and -259% in FY23, as per the report.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow