Prosus, the leading shareholder in Swiggy, may be designated as a promoter in the forthcoming initial public offering (IPO) of the popular online food and grocery delivery platform, reports The Economic Times (ET). This classification stems from Prosus’ attempts to reduce its stake in Swiggy from 33% to below 26%, a move that would subject it to certain restrictions post-IPO.
Stake Reduction Challenges for Prosus
Despite efforts to diminish its holding, Prosus has faced challenges in talks with potential investors for stake reduction. As per Indian regulations, any shareholder with a stake of 26% or more is categorized as a promoter, entailing limitations on post-IPO share sales.
Swiggy’s Anticipated $1 Billion IPO
Swiggy, headquartered in Bengaluru, is gearing up for a significant IPO, expected to reach $1 billion, with at least $600 million in offer-for-sale by existing investors. The IPO filing is anticipated in the coming months. Both Swiggy and Prosus have refrained from commenting on the matter.
Invesco’s Valuation Boost
In October 2023, US asset manager Invesco raised Swiggy’s valuation to $8.3 billion from $7.85 billion, indicating the platform’s growing worth. Invesco, holding a minor two percent stake, valued its shares at $147.6 million as of October 2023.
Swiggy’s Path to Profitability
Swiggy achieved a milestone in May the previous year, announcing profitability in its core food delivery business after nearly nine years of operation. However, its grocery delivery service, Instamart, continued to incur losses.
Market Share Dynamics
Reports indicate that Swiggy held approximately 46% of the market share in the first half of 2023, with its primary competitor Zomato capturing the remaining share. Zomato had successfully launched its IPO in July 2021, experiencing robust investor response.
IPO Timeline and Industry Landscape
Swiggy is eyeing a listing window between July and September. The competitive landscape in the food and grocery delivery sector remains dynamic, with both Swiggy and Zomato playing pivotal roles in shaping the industry’s trajectory.
Conclusion
Prosus’ potential designation as a promoter in Swiggy’s IPO adds an interesting dimension to the platform’s journey to the public market. As the IPO landscape unfolds, Swiggy’s strategic moves and Prosus’ stake adjustment efforts will be closely watched by industry observers and investors alike.
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