Swiggy shares: Swiggy Menu Update Secondary Transactions Gain Momentum Ahead of IPO

Swiggy shares: Prosus, Accel, and Elevation are selling shares in Swiggy, with buyers including 360 One and high-net-worth individuals (HNIs), according to sources speaking to The Chabndigarh News. The company has expressed confidence during negotiations that it can achieve an IPO valuation of approximately $10-13 billion later this year. As of now, secondary transactions value Swiggy at $9.3 billion.

Several informed sources have disclosed to the chandigarh news that early investors in Swiggy are selling shares and partially reducing their stakes in the food delivery company ahead of its upcoming initial public offering (IPO) later this year. New investors, optimistic about the company’s growth prospects, are acquiring these shares.

According to sources, Prosus, Accel, and Elevation Capital are among those selling shares in Swiggy. Asset and wealth management firms like 360 One, possibly through its Special Opportunities Fund, along with a few high-net-worth individuals (HNIs) and others, are actively purchasing shares in the company, as reported separately by other sources to The Chabndigarh News.

It’s common for secondary transactions to precede an IPO. In Swiggy’s case, Accel and Elevation Capital first invested in the company in 2015, and these venture funds typically sell some shares to realize accumulated gains over the years.

Prosus, which currently holds approximately 33 percent of Swiggy, aims to dilute its stake to 25 percent or lower to avoid being classified as a promoter at the time of the stock exchange listing, a move necessitating the partial stake sale.

According to sources familiar with the matter, investors and bankers are engaging in secondary transactions for Swiggy’s shares, trading them at Rs 330-350 each. These transactions value the company at $9.3 billion, as reported by The Chabndigarh News.

In a secondary transaction, shares are transferred between investors without any funds going directly to the company.

Swiggy’s recent valuation of $9.3 billion represents a decrease of approximately 13% from its previous valuation of $10.7 billion during its 2022 fundraising round. Typically, secondary transactions occur at a discount of around 20% from the company’s valuation in its last primary round.

“Bankers have recently indicated confidence that Swiggy could achieve a market capitalization or valuation of approximately $10-13 billion upon listing,” a source familiar with the discussions informed The Chabndigarh News.

Swiggy declined to provide a comment, while Prosus, Elevation Capital, Accel, and 360 One did not respond to queries from The Chabndigarh News.

If Swiggy achieves a $13 billion valuation upon its stock market debut, it would mirror Zomato’s market capitalization of $13.3 billion (Rs 1 lakh crore) in July 2021, when Zomato had a successful IPO at an exchange rate of Rs 75 per dollar.

A year later, in April 2022, Zomato’s share price declined and its market capitalization halved as investors sought profitability. However, Zomato managed to turn profitable by FY24, leading to a resurgence in its share price and a market capitalization exceeding $22 billion (Rs 1.84 lakh crore).

Analysts noted that BSE-listed Zomato was expanding faster than Bengaluru-based Swiggy. “Swiggy’s gross order value (GOV) grew 26% YoY in FY24, whereas Zomato’s combined food delivery and quick-commerce segments grew by 36% YoY,” CLSA reported in June.

For FY24, Swiggy reported a trading loss of $158 million, contrasting with Zomato’s consolidated EBITDA of $5 million for the same period, based on estimates derived from Prosus’ annual disclosures.

Swiggy initiated its IPO preparations in March 2022, appointing ICICI Securities and JP Morgan as lead managers, as reported by Moneycontrol. Since then, the company has taken steps such as appointing board members, transitioning to a public entity, witnessing fluctuations in its valuation, and filing its draft IPO prospectus with regulators. In April, it secured shareholders’ approval for a $1.25-billion IPO.

Ahead of its IPO, Swiggy announced receiving approval to raise Rs 750 crore from anchor investors in a pre-IPO round. Founded by Sriharsha Majety, Rahul Jaimini, and Nandan Reddy, Swiggy has garnered over $3.6 billion in funding from investors including SoftBank, DST Global, Alpha Wave Global, Accel, Norwest Venture Partners, Prosus, and Elevation since its inception in 2014.