Indian food delivery startup Swiggy is considering increasing the fresh issue component of its initial public offering (IPO) by $150 million, with the aim of raising up to $1.4 billion. This move could potentially make it one of the largest public listings in India in 2024. Swiggy, headquartered in Bengaluru, plans to ask shareholders to approve raising up to ₹50 billion ($600 million) through a fresh issue of shares, up from the previously planned $450 million.
Swiggy, which was valued at $10.7 billion in its last fundraise in early 2022, is also considering selling approximately $800 million worth of shares from existing investors in the IPO. The startup is targeting a valuation of about $15 billion in the IPO. These details were shared by people familiar with the matter, according to a report by TechCrunch.
The revised IPO plans, which include the enlarged fresh issue and an offer for sale by existing shareholders, will be presented to shareholders at a meeting scheduled for October 3. This information was first reported by Indian news outlet Entrackr.
Swiggy, backed by investors like Prosus Ventures, SoftBank, and Accel, is one of India’s leading food delivery and quick-commerce startups. In the financial year ended March 2024, the company reported revenue of $1.4 billion. Its quick-commerce service, Instamart, had an annual run-rate gross merchandise value of $1 billion. However, Swiggy faces stiff competition from rivals such as Zomato, Tata-owned BigBasket, and General Catalyst-backed Zepto.
Bank of America analysts recently wrote in a note to investors that the quick-commerce industry in India is expected to see increased competition in the next 6-12 months. The top three platforms, including Swiggy, are entering each other’s territories and expanding their assortment. While users are not highly price-sensitive and have a wide range of options, it remains challenging for these platforms to gain traction in each other’s strongholds.
The analysts also mentioned that Indian firms are likely to raise around $11 billion through IPOs and follow-on public offerings (FPOs) in the second half of this year. This indicates a positive trend in the Indian market and suggests that Swiggy’s IPO could be well-timed to take advantage of investor interest.
Overall, Swiggy’s plans to increase the fresh issue component of its IPO and raise up to $1.4 billion demonstrate the company’s ambition to expand its operations and capitalize on the growing demand for food delivery and quick-commerce services in India. With a strong valuation target and backing from notable investors, Swiggy is poised to make a significant impact on the Indian market. However, it will need to navigate the intense competition and evolving consumer preferences to maintain its position as a leader in the food delivery space.