Food delivery giant Swiggy, backed by SoftBank, is making significant strides toward its much-anticipated IPO in 2024. Multiple industry sources, speaking on the condition of anonymity, have revealed that Swiggy is in the process of selecting seven prominent investment banks to act as advisors for this momentous event. Among these, Kotak Mahindra Capital, Citi, and JP Morgan are likely to assume senior roles in guiding the company through the IPO process, according to one source. Another source has indicated that BofA Securities, Jefferies, ICICI Securities, and Avendus Capital may also be part of the final syndicate of advisors.
The potential selection of these reputable investment banks underscores the magnitude of Swiggy's IPO and its commitment to ensuring a seamless transition to the public markets. It's worth noting that the company, along with PayU, had conducted pitches to identify advisors for their respective domestic listings.
While these preliminary decisions have been made, it's essential to acknowledge that these are still early days for the Swiggy IPO. No final determinations have been reached regarding the exact size or the timing of the IPO launch. However, according to a report from September 12, the IPO's estimated size could fall within the range of $1 billion.
The report also suggested that Swiggy aims to file a confidential draft red herring prospectus (DRHP) in March 2024. If market conditions and other factors align favourably, the IPO is likely to be officially launched in July or August. This timeline allows for flexibility and the ability to adapt to evolving market dynamics and investor sentiment.
It's worth noting that the introduction of confidential filings by the Securities and Exchange Board of India (SEBI) in November 2022 has provided issuers with the option to keep their offer documents private via a pre-filing route until they have solidified their IPO plan. This approach, commonly used in the US, offers companies the flexibility to make strategic decisions without immediate public scrutiny.
In its most recent funding round in January 2022, Swiggy raised a substantial $700 million, valuing the company at $10.7 billion. It's important to highlight that following two consecutive markdowns, investor Invesco estimated Swiggy's valuation at approximately $5.5 billion, while Baron Capital valued it at around $7.3 billion. Several notable investors, including Alpha Wave Global, Qatar Investment Authority, and Prosus, have shown their confidence in Swiggy by investing in the company.
To provide a broader context, Swiggy's listed peer, Zomato, currently holds a market capitalization of Rs 1,08,189 crore, further emphasizing the substantial potential of Swiggy's upcoming IPO.
An additional significant development is that Swiggy announced the achievement of profitability in its food delivery business in the March quarter of FY23. This milestone was reached after factoring in all corporate costs, excluding employee stock option (ESOP) costs. Furthermore, Swiggy's quick commerce segment, Instamart, is on track to achieve contribution margin break-even in the coming weeks. This metric, widely used in the e-commerce industry, communicates the profitability of the business on a per-order basis, accounting for variable costs like logistics while excluding fixed costs and marketing expenditures.
As Swiggy navigates the path to its IPO, these positive financial indicators and strategic moves signal the company's preparedness for its public debut and its commitment to delivering long-term value to its investors and stakeholders.
