Swiggy, one of India’s largest food delivery companies, is launching its Initial Public Offering (IPO) from November 6 to November 8. The Red Herring Prospectus (RHP) filed on October 28 shows that the IPO will offer new shares along with existing shareholders selling part of their stakes through an Offer for Sale (OFS). The subscription window for anchor investors will open a day early, on November 5.
This IPO is expected to be the second-largest public offering in 2024, following Hyundai Motor India’s record IPO worth Rs.27,870 crore.
Smaller Offer for Sale, Bigger New Share Issue
Swiggy initially planned to raise Rs.3,750 crore by issuing new shares, but that amount has been increased to Rs.4,499 crore. The move comes as the company reduced the number of shares available through the OFS window, aiming to strengthen its balance sheet with fresh funds.
As per the draft prospectus filed on September 26, shareholders were earlier set to sell 18.5 crore shares through OFS, but that figure has now been revised to 17.5 crore shares. Swiggy’s valuation is projected to be around $1.13 billion (Rs.11,700 crore), which is about half of its competitor Zomato’s current market valuation of $2.67 billion.
Important IPO Dates and Listing Details
- IPO Open for Public Subscription: November 6-8
- Anchor Investor Subscription: November 5
- Price Band Announcement: Expected in a few days
- Share Allotment Finalization: November 11
- Listing on BSE and NSE: November 13
Although the official price band hasn’t been revealed yet, market speculation suggests that the upper limit could be Rs.390 per share.
Key Stakeholders and Their Holdings
- MIH India Food Holdings (Naspers Group): 30.93%
- SoftBank’s SVF II SONGBIRD (DE) LLC: 7.75%
- Essel Engg: 4.71%
- Tencent Cloud: 3.64%
- Swiggy’s MD & CEO Sriharsha Majeti: 5.36%
- Co-founder Lakshmi Nandan Reddy Obul: 1.75%
Several existing investors, including Essel India, Tencent Cloud Europe, and Elevation Capital, will sell shares in this IPO through the OFS window.
How Will Swiggy Use the IPO Funds?
While the funds from the offer for sale will go directly to the selling shareholders, the capital raised from the issuance of new shares will be utilized as follows:
- Rs.1,343.5 crore: Investment in Scootsy, a Swiggy subsidiary.
- Rs.703.4 crore: Enhancements in technology and cloud infrastructure.
- Rs.1,115.3 crore: Marketing and business promotion.
- Remaining funds: For acquisitions and general corporate purposes.
Swiggy has also reserved 7.5 lakh shares for employees, giving them a chance to benefit from the company’s growth. The IPO will allocate 75% of shares to Qualified Institutional Buyers (QIBs), 15% to Non-Institutional Investors (NIIs), and 10% to retail investors.
Financial Performance: Steady Growth with Lower Losses
Swiggy’s financial health is improving despite posting losses. In FY 2024, its losses narrowed to Rs.2,350.2 crore from Rs.4,179.3 crore in the previous year. At the same time, its operational revenue jumped by 36% to Rs.11,247.4 crore.
In the June quarter of the current financial year, the company reported a slight increase in losses—from Rs.564 crore to Rs.611 crore. However, revenue grew by 35% year-on-year, reaching Rs.3,222.2 crore, indicating steady demand and growth in business operations.
With this IPO, Swiggy aims to reduce its financial burden while expanding its operations and boosting technology and infrastructure to better compete in the food delivery space.
This IPO marks another major milestone for India’s fast-growing food delivery sector, promising a new era of growth for Swiggy while also offering retail investors a chance to be part of its journey.
