Swiggy Ltd. is set to make waves in the Indian stock market with an initial public offering (IPO) priced at ₹390 per share, the upper end of its price band.
Scheduled to open from November 6 to 8, Swiggy aims to raise approximately $1.35 billion (₹11,700 crore), potentially becoming one of the largest IPOs in India’s recent history.
Following a confidential submission and recent approval from the Securities and Exchange Board of India (SEBI), Swiggy’s offering has captured significant attention from investors and analysts alike.
What’s behind Swiggy’s ₹11,700 crore IPO?
Swiggy’s IPO combines a primary issue component, now increased to ₹4,500 crore, with an offer for sale (OFS) component to accommodate early investors’ exit plans.
Initial filings revealed a fresh issue goal of ₹3,750 crore with 182.3 million equity shares available through OFS.
Swiggy intends to channel IPO proceeds into expanding its dark store network, improving cloud infrastructure, and funding its quick-commerce subsidiary, Scootsy, positioning itself for long-term growth in India’s food delivery market.
Swiggy submitted its confidential pre-filing to SEBI in April, concealing detailed business metrics until regulatory approval was obtained in September.
The recent public update on its draft red herring prospectus (RHP) suggests a solid business foundation and investor interest as the IPO gears up for November.
Prosus, SoftBank, and Accel, Swiggy’s major backers, collectively boosted the company’s valuation to $9.3 billion as of August 2023, underlining significant financial strength ahead of the IPO.
Utilising IPO funds
Swiggy plans to use IPO funds strategically across several key areas. Investment will target its subsidiary Scootsy, network expansion of dark stores, and enhancements in technology and cloud infrastructure.
These initiatives aim to strengthen Swiggy’s operational capabilities, improve delivery times, and support its competitive stance against rivals like Zomato, which launched its IPO in July 2021, raising ₹9,375 crore.
Swiggy’s approach underscores its commitment to bolstering market presence and driving growth in India’s burgeoning online food delivery sector.
Swiggy’s valuation trajectory and recent performance
Swiggy’s valuation journey has been remarkable.
Estimated at $9.3 billion in August, it continues to draw investor interest, especially with shares having surged by over 135% in the last year.
This growth is attributed to Swiggy’s robust market presence across over 580 cities in India and partnerships with over 200,000 restaurants.
The expansion into quick commerce and technology investments has fuelled Swiggy’s market valuation, allowing it to compete head-to-head with Zomato.
Swiggy’s IPO comes amid fluctuating IPO successes in India. While Hyundai Motor’s IPO earlier this month drew attention, recent launches like Paytm and LIC had mixed results.
The market’s response to these offerings reflects cautious investor sentiment, especially amid global economic challenges.
Swiggy’s pricing at the top end of the band demonstrates its confidence in robust demand, but analysts predict a careful market watch on initial trading days.
Swiggy has appointed top-tier managers to lead its IPO, including Citi, JP Morgan, Kotak Mahindra Capital, Jefferies, ICICI Securities, Avendus Capital, and Bofa Securities.
Legal advice is provided by Cyril Amarchand Mangaldas, a reputable law firm in India.
This comprehensive advisory support reflects Swiggy’s commitment to a smooth IPO process, aligning with investor expectations and market regulations.
The post All you need to know about Swiggy’s IPO next week appeared first on Invezz
