Swiggy Files for Rs 10,000 Crore IPO, Eyes Diwali Listing: Here’s What You Need to Know
Swiggy's Ambitious IPO Plans
Food and grocery delivery giant Swiggy has filed papers for an initial public offering (IPO) that is set to be one of the largest in India's startup history, valued at approximately Rs 10,000 crore ($1.2 billion), which could potentially increase to Rs 11,700 crore ($1.4 billion).
IPO Details and Structure
The proposed IPO consists of a fresh issue of equity shares worth Rs 3,750 crore and an offer-for-sale (OFS) of 18.52 crore equity shares by existing shareholders. Swiggy is planning to raise Rs 3,750 crore through the issuance of fresh shares, while the remaining amount will be raised through the OFS component. In an extraordinary general meeting scheduled for next week, Swiggy may increase the size of the fresh issue to Rs 5,000 crore ($600 million).
Key Investors and Stake Sales
Prosus, Swiggy's largest investor with a 30.95% stake, is selling 118.2 million shares, or a 5% stake, which could fetch over $500 million. Other investors, including Accel, Elevation Capital, and Norwest Venture Partners, are also selling parts of their stakes. The founders, Sriharsha Majety, Rahul Jaimini, and Nandan Reddy, are also partially selling their stakes, with Majety and Reddy having already sold shares worth Rs 196 crore ($23 million) and Rs 101 crore ($12 million), respectively, through secondary transactions.
Financial Performance and Growth Plans
Swiggy's operating revenue saw a 34% increase in the June quarter of FY25, reaching Rs 3,222 crore. However, the company's net losses widened to Rs 611 crore from Rs 564 crore, largely due to the intense competition in the quick commerce sector. Despite these losses, Swiggy is focused on expanding its quick commerce operations, particularly through its Instamart service. The proceeds from the IPO will be used to boost its dark store network, with Rs 982.40 crore allocated for this expansion, and significant investments in technology infrastructure and brand marketing.
Market Context and Competition
Swiggy's IPO is significant in the context of India's booming startup ecosystem, where nearly 200 companies have raised $7.1 billion through IPOs this year, more than double the amount raised in the same period in 2022. Swiggy competes directly with Zomato, which has been profitable for five consecutive quarters. While Zomato's stock has seen a significant rise of over 125% year-to-date, Swiggy's listing could have a positive impact on Zomato's shares, as seen in similar scenarios where the listing of a substituting company often gives a boost to the existing listed company.
Timing and Market Sentiment
Swiggy is eyeing a listing around Diwali, a period often considered auspicious for new investments. This timing capitalizes on the current buoyant market sentiment, which has seen a robust IPO market with $7 billion worth of IPOs in the first half of FY25.
Impact on Zomato and Market Dynamics
The announcement of Swiggy's IPO is seen as positive for Zomato, as it often is when a substituting company goes public. Market analysts suggest that this could give a temporary boost to Zomato's shares. However, the long-term performance of Swiggy will depend on its ability to show a path to profitability, especially given the intense competition in the quick commerce sector.
In conclusion, Swiggy's Rs 10,000 crore IPO is a major milestone in India's startup landscape, reflecting the sector's growth and investor confidence. As Swiggy prepares for its public listing, it will be closely watched for its impact on the market and its ability to deliver returns in a highly competitive environment.