Swiggy to file draft papers for $1.3B IPO by September's first week

SoftBank-backed Swiggy, one of India’s most-valued unicorns, will most likely file its draft red herring prospectus with India’s markets regulator by as early as the first week of September, marking the second-largest IPO of a venture capital-backed company in the country.

The food delivery and quick commerce platform aims to raise Rs 10,400 crore ($1.28 billion) through its initial public offering, making it the only venture capital-backed startup to exceed Rs 10,000 crore in a public listing after Paytm, two people aware of the matter told YourStory.

“Things are moving to DRHP phase and it should be filed by first week of September. Once it’s filed, we are looking at a two-month timeline for SEBI clearance, unless they (SEBI) wants something more,” said one of the two people quoted above, requesting anonymity.

“The idea is to get listed this fiscal year and so we are moving towards that. The thumbrule is that Swiggy’s valuation will be 60% of Zomato’s market capitalisation, given its profitability and revenue. So in that context, Swiggy will be valued at around $16 billion or 15-17, to give a range,” the person added.

Zomato’s market capitalisation as of Monday was Rs 2.28 trillion or over $27 billion. Swiggy did not comment to queries sent by YourStory.

In April, Swiggy confidentially filed documents for a Rs 10,400 crore IPO with the Securities and Exchange Board of India (SEBI). Under the confidential route introduced by SEBI in 2022, companies can keep the details of their preliminary filings private. This route also allows companies to adjust the number of fresh shares proposed by up to 50% until an updated DRHP is submitted. 

The DRHP is an initial document filed with SEBI that provides an overview of the company's upcoming IPO, including its financials, business model, and risks, but does not include the final price or the number of shares.

In April, just before it confidentially filed draft papers, Swiggy got shareholder approval for its IPO comprising a fresh issue Rs 3,750 crore or $450 million and an offer for sale worth Rs 6,664 crore or around $800 million. Swiggy would also do a pre-IPO anchor round of $90 million or Rs 750 crore.

Should Swiggy’s IPO go forward as planned, it will also become one of the biggest-ever public listings in India. The proposed IPO comes at a time when its biggest rival Zomato has seen its share price soar over 67% in the last six months, making it one of India’s hottest stocks in recent times. The company reported a quarterly profit for five consecutive quarters, boosting shareholder confidence. Swiggy, however, has not achieved profitability on a consolidated level, at least as of the previous fiscal year. 

“Having a listed rival is both good and bad for Swiggy. For one, it will set a valuation benchmark, which it has already has, and when Swiggy lists, public market shareholders will not be clueless about the sector completely,” said a public market investor, who was the former head of a brokerage, requesting anonymity.

“But there’s a flip side to it. Swiggy will have to turn profitable faster. If there are two assets, pretty similar and one is generating cash, investors would buy that. So Swiggy will have to make sure it attains profitability, without compromising on growth,” the investor added.

Swiggy joins the growing list of new-age technology companies to explore public listing. This year, a number of companies including Peak XV-backed shared office space startup Awfis, insurance company GoDigit, travel-tech platform ixigo, among others have gotten listed on India’s stock exchanges, with the latest ones being Ola Electric and FirstCry, which also became India’s biggest IPOs this year. 

These companies have also seen their share prices soar as they have attracted substantial interest from public market investors. Swiggy’s IPO will also unlock more value for SoftBank, one of the world’s most prolific technology investors, who has not cut a single new cheque for Indian startups for over two years. However, SoftBank has been actively selling stakes in its private and public portfolio companies, including Ola Electric, FirstCry, and Lenskart.