- Wednesday, October 30, 2024
The company is launching the share sale amid heightened concerns of urban demand slump faced by fast moving consumer goods companies
By: Shajil Kumar
FOOD and grocery delivery app Swiggy on Wednesday announced a ₹113.30 billion (£1.04bn) initial share sale which will open from November 6-8.
The price band for the initial public offering (IPO) will be ₹371-390 and investors will have to subscribe to a minimum of 38 shares and in multiples of 38 thereafter.
Anchor investors will bid for shares on November 5. Swiggy is expected to list its shares on November 13.
The company is launching the share sale amid heightened concerns of urban demand slump faced by fast moving consumer goods (FMCG) companies.
The management stressed that Swiggy has remained unaffected by the broader trends in the economy.
“We are also reading about it, but we are not seeing that yet in the business… So far, we have not seen the impact of demand on our business,” chief financial officer Rahul Bothra said. He said Swiggy will be watching the space “closely”.
The issue comes amid a series of IPOs in the recent past including South Korean car maker Hyundai’s mega ₹280 billion (£2.56bn) issue.
Swiggy, which has a presence in over 650 cities, will be the second major food delivery app to go public after Zomato.
Quick commerce
Just like its peer Zomato, Swiggy is also experiencing a faster growth in its quick commerce business and it now contributes 40 per cent to its revenues of the company, a senior official said.
He expects this space to soon overtake the legacy food delivery business.
Group chief executive and managing director Sriharsha Majety was tight-lipped on the market share against its close rival Zomato.
The company’s share sale will also comprise comprise a fresh issue of shares wroth ₹44.90 billion (£410.83m).
Existing shareholders including Prosus and Tencent are selling a total of 175.1 million shares.
Swiggy has in recent weeks cut its internal valuation goal twice by a combined 25 per cent due to volatility in the Indian stock markets.
It was initially looking at a valuation of as much as $15 billion (£11.52bn), but following those cuts, it is now targeting $11.3 billion (£8.68bn).
As per Swiggy’s red herring prospectus, the company plans to use the IPO proceeds to repay a debt of up to ₹2.5 billion (£22.87m) and strengthen its quick commerce business.
Founded in 2014, the company has never had a full year of profits, but showed an operating profit in the June quarter.
When queried about the investor unease while investing in new-age companies, Majety said the company is not “paranoid” about it.
India’s benchmark Nifty 50 index is now down more than 8 per cent from record highs hit on September 27 due to persistent foreign selling. (Agencies)
