Food delivery platform Swiggy is trying to raise the size of its initial public offering (IPO). The company intends to raise more money by issuing more shares in order to accomplish the same goal.
So now, Swiggy is planning to raise Rs 5,000 crore in a fresh issue instead of the Rs 3,750 crore that it was expected to raise earlier. This was first reported by Moneycontrol.
The Rs 1,250 crore increase comes at a time when competition has been intensifying in the quick commerce segment. Several companies have been eyeing the quick commerce area, such as Reliance, Flipkart, Rapido, Amazon and more. Flipkart was the latest company to launch its quick commerce vertical 'Flipkart Minutes'.
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Initially, the food delivery platform’s plan was to raise $1.25 billion through its IPO and Rs 3,750 crore in a fresh issue, as per Moneycontrol. Further, the company was planning to raise around Rs 6,664 crore via an offer for sale. Under an offer for sale, existing shareholders, such as investors and promoters, can sell their shares to the public.
Now, if the company’s board approves the new proposal, Swiggy plans to raise around $1.4 billion. An additional $150 million will reportedly come from the fresh issue. The decision to increase the IPO size will be taken by the company’s board on October 3 at their extraordinary general meeting. The report also adds that the company hasn’t made any plans yet to change its offer for sale component part.
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Swiggy Versus Zomato
The company's decision to increase the IPO size has been taken while keeping several factors in mind such as the surge in investment interest (as seen in Zepto's latest funding) and competitive performance, particularly Zomato's.
Swiggy’s competitor Zomato’s market size grew to about 29 per cent in July. According to analysts at USB, this was more than twice as high as Swiggy's 11 per cent gain during the same period, as reported by Moneycontrol.
For example, if we compare Swiggy and Zomato’s financials, while Zomato has reported net profit consistently, Swiggy is still trying to recover its losses.
In its Q1 FY25 results, Zomato reported a net profit of Rs 253 crore. This was a significant increase from the Rs 2 crore it had reported in the same quarter last year. Additionally, the company reported a revenue of Rs 4,206 crore from Rs 1,416 crore it reported last year.
Meanwhile, Swiggy reported a net loss of Rs 2,350 crore in FY24. However, what was impressive was that the company's net loss was reduced by 44 percent from the previous year. The company attributed the success of its quick commerce platform, Instamart, as the reason behind its growth. The company said in a statement, “Profitability has sharply improved YoY, as the peak of investments in Instagram is behind us and the business continues to grow rapidly, while the relatively more mature food delivery business is scaling up profitably.” With the new IPO, it will be interesting to see how Swiggy performs in the competitive landscape.
