Food ordering and delivery app Swiggy’s revised draft documents with the Securities and Exchange Board of India (SEBI) for an initial public offering (IPO) worth Rs 10,000 crore is one of the most awaited and biggest in recent times.
According to the draft, Swiggy plans to use the funds raised from the IPO to expand the business, improve its technology and infrastructure, and repay debts. The company stated that the proceeds will be deployed by FY28. However, the deployment may be affected by a number of factors such as market conditions, trends in quick commerce market, regulatory challenges, location identification for dark stores, etc.
The company also clarified that throughout these four financial years, it will continue to do acquisitions. However, the decision may be affected by on a number of factors, including the timing, nature, size and number of acquisitions undertaken, as well as general factors affecting our results of operation, financial condition and access to capital.
“We intend to deploy the net proceeds towards acquisitions over the course of four fiscals from the date of listing of the equity shares pursuant to the offer, and the amount of net proceeds to be used for acquisitions will be based on our board’s decision,” the draft read. But the company also mentioned that the actual deployment of funds will depend on a number of factors, including the timing, nature, size and number of acquisitions undertaken, as well as general factors affecting the operations, financial condition and access to capital.
Further the draft read, “Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence of significant goodwill impairment charges, amortisation expenses for other intangible assets, and exposure to potential unknown liabilities of the acquired business.”
Prior to this, Swiggy acquired six businesses, the latest one being LYNK Logistics. The other five acquired companies are Dineout, Kint, Scootsy and Supr Daily.
The size follows that of Paytm’s Rs 18,300 crore IPO, while other significant IPOs were those of Zomato, Ola Electric, among others.
The food delivery giant which counts names like Prosus, Accel India, Elevation Capital, Goldman Sachs, Alpha Wave Ventures, etc, has bagged about Rs 30,138 crore across 15 rounds against Rs 14,148 crore of Zomato, as per Tracxn data.
Though Softbank is going to retain its stakes, Prosus, which holds about 31 per cent of the stakes, is set to be a key player in public listing of Swiggy as it will release around 118.2 million shares as a part of the IPO. It is to be noted that Swiggy’s DRHP filing comes at a time when its biggest competitor hit a 8 per cent drop in share price over a period of 5 days.
Interestingly, to take on the biggest rival Zomato which acquired Blinkit in 2022, Swiggy has taken a similar route of strengthening the quick commerce vertical Instamart. The latter, according to the filing, has allocated close to Rs 980 crore for dark stores, the number of which stands at 523 as of FY24, a 24 per cent increase from the previous financial year. This number is close to Blinkit’s 526.
Further, the company said that its revenue from the segment was Rs 1,515 crore, in the quarter that ended on June 30, 2024.