Swiggy gets one step closer to $1.25 bn IPO

Photograph: PTI Photo from the Rediff Archives

Food delivery major Swiggy has received approval from its shareholders for a $1.25 billion initial public offering (IPO), according to filings made with the Registrar of Companies sourced by Tofler.

The Bengaluru-based firm plans to raise as much as Rs 3,750 crore (around $450 million) via a fresh issue and up to Rs 6,664 crore (around $800 million) through an offer-for-sale (OFS) component, the filings stated.

The company also aims to raise around Rs 750 crore from anchor investors ahead of its IPO, expected later this year.

“...the consent and approval of the shareholders of the company be and is hereby accorded to create, issue, offer, allot and/or transfer of its equity shares up to an aggregate of Rs 3,750 crore by way of a fresh issue of equity shares up to an aggregate amount of Rs 6,664 crore by certain existing shareholders (OFS)...,” the filings read.

However, the firm is yet to file its IPO papers with the Securities and Exchange Board of India.

Swiggy’s investors include Prosus, which owns around 32 per cent of the company, SoftBank with 8 per cent, Accel at 6.2 per cent, its founder group with 6.7 per cent, and Elevation Capital with 4.4 per cent.

Others include Norwest Venture Partners, Tencent, DST Global, and Alpha Wave, according to Tracxn — a market intelligence platform.

The disclosure comes shortly after an extraordinary general meeting (EGM) of Swiggy’s shareholders on April 23.

During the EGM, co-founders Sriharsha Majety and Nandan Reddy were also appointed executive directors (EDs) of the company.

Majety has been appointed as ED of the company for three years effective from April 1, 2024, and his remuneration for 2024-25 and 2025-26 (FY26) will be Rs 2.5 crore and Rs 3 crore, respectively, the filings said.

The board at Swiggy also appointed Rahul Bothra as chief financial officer and M Sridhar as the company’s secretary and compliance officer, the filing further stated.

Swiggy did not comment on the development.

After the so-called funding winter, accompanied by a global economic slowdown, put the brakes on IPO plans of many Indian startups in 2023, as many as 14 companies are eyeing public listings in 2024 as macroeconomic headwinds have begun to subside, Business Standard reported earlier.

These include firms like FirstCry, Ola Electric, PayU, MobiKwik, and Awfis, among others.

E-commerce major Flipkart is also likely to float its IPO in FY26.

Financial recovery

In the lead-up to its IPO, Swiggy has undergone retrenchments in an effort to improve its financial health.

Since the beginning of 2023, Swiggy has conducted layoffs and shut down many of its unviable business verticals.

The firm also introduced a Rs 2 platform fee for all its users, after which it teased an increase of this fee to Rs 10.

These measures led to its food delivery business turning profitable in the January-March quarter of 2022-23 after considering corporate costs and excluding employee stock options.

According to filings from Swiggy’s largest investor Prosus, Swiggy’s core food delivery business grew 17 per cent to deliver a gross merchandise value (GMV) of $1.43 billion in the first half (H1) of 2023-24 (FY24).

This was less than that of Zomato, which reported a GMV of around $1.84 billion during the same period.

Meanwhile, its trading loss in the food delivery platform reduced to $208 million in H1FY24, compared to $321 million in the corresponding period a year ago.

Valuation markups

Improvements in Swiggy’s financial health have also led its investors to mark up the company’s valuation.

After consecutive valuation cuts, US-based fund manager Invesco, earlier this month, marked up the valuation of Swiggy for the third consecutive time to $12.7 billion, a 19 per cent increase from what the company was valued at during its last fundraise, according to regulatory filings.

The Bengaluru-based startup had raised a massive $700 million funding round led by Invesco in January 2022, which made Swiggy a decacorn (a term used to describe a privately held company with a valuation that exceeds $10 billion), valued at $10.7 billion.

Invesco had, in October last year, marked up Swiggy’s valuation to $7.85 billion.

It subsequently marked up this figure to $8.3 billion in January this year, before valuing the company at $12.7 billion.

Besides Invesco, US-headquartered asset management firm Baron Capital had also marked up Swiggy’s valuation to $8.54 billion in August last year.

It, yet again, marked up Swiggy’s valuation to $12.1 billion last month.