The wait for the highly anticipated initial public offering (IPO) of Swiggy is finally over as the food and grocery delivery firm is set to hit Dalal Street on November 6. The three-day IPO of Swiggy will close on November 8, while the anchor book will open for a day on November 5. The food tech company filed its offer document with the capital market regulator SEBI on April 30 through the confidential pre-filing route, which was approved last month.
The direct rival of Zomato looks to raise ₹11,300 crore through IPO, which is a combination of a fresh issue of shares worth ₹4,500 crore and an offer for sale (OFS) of ₹6,800 crore by promoter and existing shareholders. The price band of the public issue will be priced in the range of ₹371 to ₹390 per share, a source close to the development told Fortune India.
Under the OFS, existing shareholder such as Accel India IV (Mauritius) Ltd, Apoletto Asia Ltd, Alpha Wave Ventures, LP, Coatue PE Asia XI LLC, DST EuroAsia V B.V, Elevation Capital V Ltd, Inspired Elite Investments Ltd, MIH India Food Holdings B.V, Norwest Venture Partners VII-A Mauritius, and Tencent Cloud Europe B.V will be offloading their stake in the company.
“Early investors like Accel, Elevation Capital and Norwest Ventures have made 10x or are making upto 35x in returns on the portion they decided to sell…SoftBank continues to stay invested,” as per source.
Swiggy is considered to be one of the most valued new age consumer brands to tap the Indian capital market. The online food delivery company was last valued at $13.3 billion by Invesco, a U.S.-based asset management firm. The valuation was 24% higher than the $10.7 billion value ascribed by Invesco in January 2022, when the asset management firm invested in the company.
As per the red herring prospectus (RHP) filed with the SEBI, the company intends to use capital raised from fresh equities to investment in its material subsidiary, Scootsy, for repayment of certain borrowings availed by the company and expansion of its dark store network for quick commerce segment. A pat of the capital will be invested in technology and cloud infrastructure; brand marketing and business promotion expenses; and funding inorganic opportunities. The fund will be also used to meet general corporate purposes.
Out of ₹4,500 crore from fresh equity issuance, Swiggy proposes to invest ₹1,178.70 crore for the expansion of its dark store network for the quick commerce business. The company will use ₹755.4 crore to set up additional dark stores and ₹423.3 crore to make lease and license payments of all the dark stores for fiscals 2025, 2026, 2027 and 2028. The food delivery company plans to open around 741 dark stores measuring an aggregate of approximately 2.59 million square feet.
The company started quick commerce business in 2020 in some of the cities where its food delivery business was established. As of June 30, 2024, it run a total of 581 open dark stores spread across 32 cities in the northern, western, eastern and southern regions of India. “Our Dark Store infrastructure has grown significantly over time, from 12 Dark Stores as on April 1, 2021, to 581 Dark Stores as on June 30, 2024. As on June 30, 2024, the size of our Dark Stores ranges from 1,400 square feet in Sector 46, Noida to 10,810 square feet in Garudacharpalya, Bengaluru, with an average area of 3,006 square feet per Dark Store,” the RHP highlighted.
Besides, ₹164.8 crore will be used for repaying debts of its subsidiary, Scootsy, which is the authorised distributor of various leading brands in India for wholesalers and retailers. As of September 30, 2024, Scootsy had outstanding loan of ₹223.81 crore.
The repayment of the borrowing will help in improving the debt-equity ratio, which will allow the company to raise additional capital in the future to fund potential business development opportunities, Swiggy says in its RHP.
Among others, ₹703.4 crore will be used for building technology and cloud infrastructure, while ₹1,115.3 crore to be invested for brand marketing and business promotion expenses for enhancing the brand awareness and visibility of its platform, across the segments.
Last week, Swiggy raised its platform fee on restaurant orders from ₹7 to ₹10, after rival Zomato announced a similar hike, calling it a “festive season platform fee.” In the last one year, both the companies increased its platform fee by 400%, with Swiggy first introducing the fee at ₹2 per order in 2023, followed by Zomato in August 2023.
Founded in 2014, Swiggy is an Indian online food ordering and delivery platform operating in more than 600 Indian cities in collaboration with nearly 2 lakh restaurants. Swiggy Instamart, its quick commerce platform operating in 25+ cities, delivers groceries and other essentials across 20+ categories in 10 minutes. For the financial year 2023-24, the company reported a 44% decline in its losses to ₹2,350 crore from ₹4,179 crore in the previous year (FY23). The revenue grew by 36% to ₹11,247 crore, from ₹8,265 crore in the last fiscal.
