New Delhi, Oct. 15 -- Food delivery and essentials aggregator Swiggy, which is gearing up for one of the largest new-age initial public offerings by a new-age company, with an aim to raise up to $1.4 billion in the coming months, saw its imputed fair valuation estimate by one of its existing investors get a mark-up, albeit still a major discount to its publicly listed arch rival Zomato.
Its US-based public markets investor Invesco, which first invested in the company in 2022, marked up the fair value of its investment in the Indian company as of 30 September, 8% higher than levels three months ago.
Invesco previously knocked down the value of its investment to less than half the original amount via a series of markdowns starting mid-2022. It later marked up the valuation by 44% as of 31 December, 2023, compared to its assessment in September that year and pegged it even higher as of March 2024. It kept the fair value of its investment unchanged in June 2024.
With the latest assessment of its investment, Invesco has valued Swiggy at about $13.2 billion, about 8% higher than its previous valuation of about $12.2 billion at the end of June, when it kept the valuation unchanged.
The latest valuation, while the highest for Swiggy, is still far off from its publicly listed rival Zomato. The Gurugram-based company, which competes with Swiggy in its offerings in food-delivery and quick commerce, currently commands a market capitalisation of $29.3 billion on the public market.
Zomato's stock price is up over 2.5x over the past one year and has more than doubled since January this year, driven by improving investor sentiment about the company.
Swiggy is also getting massive interest in its unlisted shares ahead of its highly-anticipated IPO. While the company is reportedly increasing the size of its primary offering, its secondary shares have also been in demand.
Firms such as Torroz Fintech and Strootaay Unlisted Brokers, which sell unlisted shares in the market, have together picked up shares as much as Rs 662.3 crore from institutional investors including Norwest, Elevation and the co-founder Sriharsha Majety himself, per its updated draft red herring prospectus.
Torroz picked up Rs 23 crore from Majety, while Rs 200 crore from Norwest Venture Partners. Meanwhile, Strootaay has bought shares worth Rs 439 crore from Elevation Capital. These latest transactions occurred at the price of Rs 345 per share.
Swiggy's recent set of backers include high-net worth individuals such as Madhuri Dixit, Amitabh Bachchan's family office among others. Two listed firms Hindustan Composites and Modern Insulators have also picked up shares in the startup.
The company also reported increasing the size of its primary issue size to Rs 5,000 crore. Along with its offer-for-sale, the company is aiming to raise 11,664 crore in the IPO.
The IPO will see the prominent investors including Prosus, Tenecent, Elevation and Accel among others, trimming their stakes in the OFS.
While Accel is eyeing over 32x on its return, Elevation is looking at 31x returns. Russian billionaire Yuri Milner's Apoletto Managers is looking at 25x return and Norwest is sitting on 24x gain.
While its rival Zomato's valuation premium emanates from its profit visibility over the last few quarters, Swiggy is not profitable yet. In the last financial year, the company cut its losses by 43% to Rs 2,350 crore. Meanwhile, its revenue from operations grew 36% to Rs 11,247 crore.
Published by HT Digital Content Services with permission from VC Circle.