Swiggy has been delivering fufilling meals across Indian cities for close to a decade now, but it’s yet to dish out stocks for retail investors. As the firm is eyeing a stock market debut by September this year, a jolt to its valuation could sour the IPO for the food delivery giant.
Its US-based investor Invesco US has cut down the valuation for Swiggy to $8 billion from $10.7 billion in its books.
The action came little more than a year after Invesco led a $700 million funding round for Swiggy in January 2022. Swiggy isn’t the only Indian firm facing a markdown by its own investor, as OYO was brought down from $10 billion to $2.7 billion by SoftBank Group Corp. in September last year. After a massive loss at Byju’s its investor Prosus Group also reduced its valuation to $6 billion on its books, which is a crash from the ed-tech startup’s last known $22 billion value.
Swiggy‘s rival Zomato, which launched its IPO in 2021, has lost 40 per cent of its market valuation, the past one year. It had been considered overvalued by many analysts at the time of its stock market debut.
Swiggy has also been trying to cut down costs, by shutting down its meat market and selling its cloud kitchen business in a share swap.
The valuation cuts add a new dimension to the impact of the dwindling market conditions on the Indian startups. Funding activity in the Indian startup ecosystem slowed down last year, but because many of the larger startups raised capital on convertible notes (and hence pushed the price discovery to a later date) or did not raise capital at all, their last valuations have largely remained unchanged.
Masayoshi Son, founder and chief executive of SoftBank Group, alluded to this trend last year when he cautioned that the funding winter for startups may continue for longer because some unicorns were unwilling to accept lower valuations in fresh funding deliberations.
It’s important to note nonetheless that investors value equity of their existing portfolio startups in different ways and one backer’s value adjustment, however noteworthy, does not necessarily represent the views of other investors — and sometimes those of the startups themselves.
What are your thoughts on the IPO possibiilities for Swiggy this year?
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