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March 9, 2024

Baron Capital Boosts Swiggy’s Valuation to $12.1 Billion: Preparing Grounds for a High-Stakes IPO

US-based asset management firm Baron Capital Group has significantly increased the valuation of its stake in India’s food delivery giant, Swiggy, to a staggering $12.1 billion. This substantial boost, marking a 13% increase from the previous valuation, underscores the company’s robust performance and investor confidence.

Baron Capital’s move to mark up the fair value of its Swiggy holdings for the third consecutive time highlights the firm’s optimistic outlook on the Bengaluru-based delivery platform. The valuation surge, disclosed in filings with the US Securities and Exchange Commission, reflects Swiggy’s value as of December 31, 2023.

The fund’s investment in Swiggy dates back to its participation in the $700-million funding round in January 2022, a testament to its long-term commitment to the company’s growth trajectory. With the latest valuation adjustment, Baron Capital’s stake in Swiggy has surged to $87.2 million from its initial investment of $76.7 million.

This upward revision comes in stark contrast to the previous year’s valuation rollercoaster experienced by Swiggy, notably with US investment firm Invesco marking down the food delivery giant’s value by 33%. However, Baron Capital’s bullish stance on Swiggy’s prospects positions the company favorably as it gears up for a potential IPO.

Swiggy’s IPO ambitions are substantial, with the company eyeing a valuation target of $11 billion, slightly surpassing Baron Capital’s latest valuation. The company intends to file its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) imminently, aiming to raise an estimated $1 billion (Rs 8,300 crore) through the IPO this year.

To bolster its IPO preparations, Swiggy has intensified efforts to enhance profitability. Despite witnessing a commendable 45% increase in revenue, reaching Rs 8,625 crore in FY23, the company grappled with a widening net loss, amounting to Rs 4,179 crore. Swiggy’s largest expenses in FY23 were attributed to purchases of stock in trade, which surged by 48% to Rs 3,302 crore, while employee benefits costs climbed 25% to Rs 2,130 crore.

The acquisition of Dineout, Swiggy’s restaurant technology platform in 2022, contributed Rs 77.5 crore to revenue but incurred an operating loss of Rs 176 crore during the financial year. These strategic moves reflect Swiggy’s concerted efforts to diversify its offerings and solidify its market presence amidst intensifying competition.

As Swiggy navigates the complexities of the food delivery landscape and hones its financial performance, the company remains poised to leverage Baron Capital’s bullish valuation to propel its IPO aspirations. With investors closely monitoring its trajectory, Swiggy’s journey towards a high-stakes IPO promises to be a defining moment in India’s tech ecosystem.

 

Jhumpa Lahiri

Jhumpa Lahiri

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