Swiggy IPO: Swiggy IPO: Prosus may pocket $500 million; founders snag $36 million via secondaries

Swiggy’s largest investor Prosus could realise more than $500 million from the food and grocery delivery firm’s upcoming initial public offering as it plans to offload 5% stake in the IPO. The amount is calculated based on Swiggy’s estimated listing valuation at $11-12 billion. It may change depending on the final issue price.

Besides Prosus, other investors including Elevation Capital, Accel and Norwest will sell part of their stake in the IPO, according to Swiggy’s updated draft red herring prospectus (DRHP) filed late on Thursday.

Prosus holds a 31% stake in Swiggy through its affiliate MIH India Food Holdings. It is expected to recover more than half of its total investment of around $1 billion, made over multiple rounds, by selling less than one-fifth of its stake.

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The stake sale and issue of fresh shares by Swiggy could bring Prosus’ stake below 25%, preventing the investor from being marked as the company’s promoter.

As per the updated DRHP, Swiggy’s shareholders will sell a total of 185.3 million shares with Prosus leading the offer for sale (OFS) with 118.2 million shares.

Venture capital firm Accel is selling 10.6 million shares worth about $46 million, while Elevation Capital, one of the earliest investors in Swiggy, will realise about $32 million from its sale of 7.4 million shares.Accel and Elevation Capital (then SAIF Partners India) had written the seed funding cheques of $1 million each for Swiggy in January 2015.

In October 2014, at the time the term sheets were signed, Swiggy had onboarded 25 restaurants in Bengaluru’s Koramanagala neighbourhood, and was servicing an average of 35 orders per day.

Through the IPO, Swiggy’s founders Sriharsha Majety, Rahul Jaimini and Nandan Reddy are also partially selling their stakes.

As per the prospectus, Majety and Reddy sold shares in the company between July and September this year through secondary transactions. While Majety offloaded a stake worth Rs 196 crore ($23 million), Reddy sold shares amounting to Rs 101 crore ($12 million).

Presently, Majety, who is Swiggy’s group CEO, holds 6.23% stake in the company, and will be selling shares worth $7.5 million.

Reddy, who is the only executive director on Swiggy’s board other than Majety, is also offloading shares for a similar amount. Reddy currently holds 1.76% of Swiggy.

Jaimini, the third cofounder who left the company in 2020 but still holds 1.14% stake, is also selling a part of his shares.

The Bengaluru-based company also plans to raise up to Rs 3,750 crore, or about $448 million, through fresh issue of shares, the draft papers said.

Swiggy had made a confidential DRHP with the Securities and Exchange Board of India (Sebi) in April and received an approval from the stock market regulator earlier this week.

According to the approval granted by the company’s board for its IPO plan in April, the OFS component was sized at $800 million, in addition to a fresh issue of $450 million – making the total issue of $1.25 billion.

The amount of fresh capital being raised may also be increased to $600 million, and the company has called for an extraordinary general meeting to get this approved by its shareholders, ET had reported on September 10.