Swiggy eyes Rs 3,750 Cr in fresh issue as Prosus prepares to sell 63.8% of OFS

Foodteh major Swiggy has filed a draft red herring prospectus (DRHP) with the Security Exchange Board of India (SEBI) for an initial public offering (IPO). 

The company has proposed to raise funds through a fresh issue of equity shares aggregating up to Rs 3,750 crore and an offer for sale or OFS of up to 185,286,265 equity shares. Out of the total OFS, 63.8% of shares will be offloaded by Prosus, with other shareholders also divesting their shares in the OFS.

Several prominent investors are participating in the offer for sale which include Accel, Alpha Wave Ventures, Apoletto Asia, Ark India Food-Tech Private Investment Trust, Baron Emerging Markets Fund, Coatue PE Asia, DST Asia VI, DST EuroAsia V B.V., Elevation Capital, Goldman Sachs, Harmony Partners, HH BTPL Holdings, Inspired Elite Investments, Lynks Shareholders' Trust, MIH India Food Holdings, Norwest Venture Partners, Tencent Cloud Europe, Time Capital Foodtech Advisors, West Street Global Growth Partners, and West Street Global Growth Partners Emp. 

Individual selling shareholders include Lakshmi Nandan Reddy Obul, P.R. Venketrama Raja, Rahul Jaimini, Samina Hamied, and Sriharsha Majety.

Swiggy plans to use its primary proceeds to invest in its material subsidiary, Scootsy, expand its dark store network for quick commerce, and make lease or license payments for dark stores. Additionally, the company will invest in technology and cloud infrastructure to enhance its platform's capabilities and efficiency.

As per the company, it aims to fund inorganic growth through acquisitions to strengthen its market position and expand its offerings.

Kotak Mahindra, Citigroup Global Markets India, Jefferies India, Avendus Capital, JP Morgan India, BofA Securities India, and ICICI Securities are the book running lead managers. According to the DRHP, Prosus is the largest external stakeholder with 30.95% followed by SoftBank with 7.75% shares of the company.

Swiggy showed impressive financial progress, with a 36% growth in revenue to Rs 11,247 crore in FY24 and a 44% reduction in losses, bringing them down to Rs 2,350 crore in the same period. For the quarter ending June 2024 (Q1 FY25), Swiggy recorded Rs 3,222 crore in revenue from operations, 34.81% up from Rs 2,390 crore reported in the same quarter of the previous year. Its losses went up only 8.3% to Rs 611 crore in Q1 FY25 as compared to Rs 564 crore in Q1 of FY24. 

Swiggy's quick commerce business Instamart generated Rs 374 crore in revenue in Q1 FY25.

Also Read: Zomato crosses $25 Bn market cap with Rs 253 Cr profits in Q1 FY25

Swiggy's entry into the public market will escalate a competition that has largely played out in the private market for over seven years. While Zomato currently holds a significant lead with a market capitalization of approximately $29.5 billion, more than twice the size of Swiggy, the latter's IPO debut will intensify the rivalry between these two food-tech giants. This public face-off will particularly focus on food delivery and quick commerce services, where both companies are vying for market dominance.