SUMMARY
Accel is selling around 1.06 Cr shares worth over INR 412 Cr, which would translate into a 34.9x return on its investment, while Elevation is selling 73.96 Lakh shares in the IPO.
Prosus is Swiggy’s largest shareholder and will net a net consideration of INR 4,254.7 Cr or $500 Mn, a three times return on his investment if he sells a fifth of his stake
Brokers have advised investors to bid for Swiggy’s IPO only if they plan to hold the stock for the long term, while there have also been some ‘avoid’ recommendations.
Of Swiggy
on the eve of its IPO and aiming to raise over INR 11,300 Cr, many of its early investors are set to rake in big profits
Early investors Accel India and Elevation Capital are expected to earn more than 34x returns by selling part stake in the company.
Both Accel India and Elevation Capital (formerly SAIF Partners) first invested in the food delivery and fast commerce giant in 2015 during its Series A funding round. Over the years, the venture capital firms have increased their stake in follow-on rounds.
Prior to the IPO, Accel owns 10.51 Cr shares in Swiggy at a weighted average price of INR 11.17 per equity share. As part of the company’s offer for sale (OFS) component in its IPO, Accel is selling around 1.06 Cr shares worth over INR 412 Cr at the higher end of the price range.
This would translate into a 34.9x return on Accel’s investment in these shares in Swiggy.
On the other hand, Elevation Capital owned 6.9 Cr shares in Swiggy at a weighted average price of INR 11.44 per equity share. As part of the OFS during the IPO, the VC firm is selling 73.96 Lakh shares worth over INR 288 Cr, which would translate into a 34.1x return on its investment.
Among the key investors who came on board later in Swiggy’s journey, Prosus is likely to see the biggest outcome. The global investment giant is Swiggy’s largest shareholder and will receive INR 4,254.7 Cr or $500 million net, a three times return on its investment if it sells a small portion of its stake.
Who else will earn the proceeds from Swiggy’s IPO?
Zomato’s biggest rival Swiggy has set a price range of INR 371-INR 390 per equity share for its IPOwhich consists of an OFS component of 17.5 Cr shares and a fresh issue of shares worth INR 4,499 Cr. At the higher end of the price range, the company is looking to raise INR 11,327 Cr for its public offering.
Norwest Venture Partners, which also invested in Swiggy in 2015, as part of its Series B funding round, is expected to earn a 26.3x return on its investment by acquiring 64.06 Lakh shares from 7.06 Cr shares in the company to sell.
Similarly, Apoletto Asia is also expected to earn a return of 27.9x by selling around 17 Lakh shares as part of the OFS, worth over INR 66 Cr.
On the other hand, investors who entered the game relatively later, including Tencent, DST Global and Swiggy’s largest stakeholder Prosus, are also expected to more than double their returns.
Prosus first invested in Swiggy through Myriad International Holdings (MIH) India Food Holdings in 2018 and led the company’s $1 billion funding round in which Tencent and others also participated. Today, Prosus has a 31% stake or over 69 Cr shares in Swiggy, but it is selling only a fifth of this stake in the IPO.
Tencent Cloud Europe BV held 8.12 Cr shares in Swiggy at a weighted average price of INR 165.47 per equity share. As part of the OFS, the Chinese internet company will sell 63.27 Lakh shares worth INR 246.7 Cr, representing a 2.3x return on its investment in these shares.
DST Global’s DST EuroAsia posts a gain of 4.1x by selling 56.22 Lakh shares in Swiggy as part of the OFS. Coatue PE Asia will also earn a return of 3.8x by selling 38.85 Lakh shares.
Meanwhile, Chinese food delivery company Meituan, which owned 3.26 Cr Swiggy shares through Inspired Elite Investments, is expected to earn a 4.3x return on its investment in these shares by selling 67.47 Lakh shares.
On the other hand, Alpha Wave, which joined as Swiggy’s investor in 2021, is getting a 2.2x return by divesting almost half of its stake in the company.
The other selling stakeholders include co-founders Sriharsha Majety, Lakshmi Nandan Reddy and Rahul Jamini, Goldman Sachs, Times Internet Limited and Harmony Partners.
Swiggy IPO: A Brief Summary
In its RHP filed last month, Swiggy increased the fresh issue size to INR 4,499 Cr while slightly trimming the OFS size for the IPO. The company is targeting a valuation of $11.3 billion, down 26% from the $15 billion it targeted in initial filings.
Opening tomorrow (Wednesday November 6). Bidding for Swiggy’s IPO will continue till Friday, November 8. The anchor bidding will take place later today.
Speaking to Inc42 earlier, Prashanth Tapse of Mehta Equities said that only long-term investors should invest in the IPO. Recently, brokerage firms including Bajaj Broking and SBI Securities have advised investors to subscribe to the offer only with a long-term investment perspective.
Meanwhile, Aditya Birla Money has given an ‘avoid’ advice.
“While Swiggy’s decision to downgrade leaves some upside room for the investors, we still recommend an AVOID recommendation on this issue due to the “reported negative” cash flows and continued losses, in addition to a slightly high rating of 7, 7x FY24 price-to-price. -sales,” said the investment firm’s research note on Swiggy’s IPO.
It is pertinent to note that Swiggy is going public with significant losses on its books. Archrival Zomato is already a profitable company and is far ahead of Swiggy in most metrics for food delivery, quick commerce and entertainment industries.
Swiggy’s consolidated net loss rose over 8% YoY (YoY) to INR 611 Cr in the June quarter (Q1) of FY25, while operating revenue rose 35% YoY to INR 3,222.2 Cr. In FY24, Swiggy posted a net loss of INR 2,350 Cr on an operating revenue of INR 11,247.3 Cr.