Food and grocery delivery platform Swiggy on Tuesday launched a qualified institutional placement (QIP) issue to raise Rs 10,000 crore, just a year after its market debut.
Swiggy has fixed a floor price of Rs 390.51, a 2% markdown from Tuesday’s closing price of Rs 397.95 on the BSE. Notably, this pricing is marginally above its initial public offering price of Rs 390 per share. The company has indicated it may extend an additional discount of up to 5% on the floor price.
Competition intensifies in quick commerce sector
The fundraising comes as the domestic quick commerce market expands amid surging demand and intensifying competition.
Based on the floor price, Swiggy’s market capitalisation would stand at around Rs 97,400 crore. The fresh equity issuance will lead to a 9.3% dilution on a post-money basis, though this figure could climb if discounts are applied. It may be noted that when rival Eternal, which operates Zomato and Blinkit, raised Rs 8,500 crore through a QIP last year, it had diluted just a 3.7% stake.
What do pre-placement documents indicate
According to the pre-placement document, Swiggy intends to channel Rs 4,475 crore towards scaling up its quick commerce infrastructure. The remaining corpus will be allocated towards technology and cloud infrastructure upgrades, brand marketing initiatives, and potential acquisitions.
This marks Swiggy’s maiden capital raising exercise after the IPO, which had garnered around Rs 4,500 crore.
For the September quarter, Swiggy’s consolidated cash burn stood at Rs 740 crore, exceeding Eternal’s Rs 543 crore.
Factoring in the fresh capital and an anticipated Rs 2,400 crore from divesting its Rapido stake, Swiggy’s cash reserves would touch Rs 17,000 crore. In comparison, Eternal held over Rs 18,000 crore as of September 30, while Zepto’s war chest stood at around Rs 7,000 crore as of November.