Equity Issue: Swiggy’s Rs113bn IPO
Indian food delivery company Swiggy braved volatile markets and weak appetite for some other technology stocks to serve up a winning float.
The SoftBank-backed company’s Rs113bn (US$1.34bn) IPO was the second-largest technology IPO globally in 2024 and the second-largest Indian IPO of the year.
The deal’s significance went way beyond size. It restored investor confidence in large Indian technology IPOs after the disappointing listing of Paytm, officially called One 97 Communications, in 2021 dampened appetite for the sector.
Swiggy was also the first Indian issuer to successfully complete an IPO after making a confidential filing, a mechanism the Securities and Exchange Board of India introduced in December 2022.
Being a loss-making company, it did not want chatter around its finances before regulatory queries were out of the way and it was ready and able to answer investors’ questions.
The company made the confidential filing in April, followed by a public filing in September.
Swiggy launched the float in November at a time when it seemed the hot Indian market was at a turning point. Foreign investors had been heavily selling Indian shares and around half a dozen new listings – including the country’s largest ever IPO, that of Hyundai Motor India – were trading under water.
Analysts were also flagging that Swiggy’s road to profitability was bumpy as the grocery delivery business burned cash.
Nevertheless, Swiggy had to move quickly as, weeks after its public filing, bigger food delivery rival Zomato announced a plan to raise up to Rs85bn through new shares.
To ensure the deal’s success, Swiggy set an IPO valuation of up to US$11.3bn, lower than the US$12bn–$13bn it was earlier targeting.
The company also strategically set the price range at Rs371–Rs390. The top of the range represented a price to sales ratio of around six times for the financial year ending in March 2025, compared with 11.3x for Zomato.
The IPO drew strong support from both domestic and foreign institutions, with the former dominating the anchor book while the latter made up the majority in the bookbuild portion.
Large local mutual funds and insurance companies were among the anchor investors and the foreign anchor investors included Capital Group, Fidelity, Norway’s sovereign wealth fund and Eastspring Investments.
Swiggy’s IPO, comprising Rs45bn of primary and Rs68bn of secondary shares, was subscribed 3.59 times and priced at the top of the range.
The shares made a strong trading debut on November 13 with a 17% gain. The stock closed at Rs54.90 on December 31, 38.7% above the issue price.
Avendus, Bank of America, Citigroup, ICICI Securities, Kotak, Jefferies and JP Morgan were the lead managers.
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