Prosus, the largest shareholder in Swiggy, is likely to be designated as a promoter for the upcoming initial public share sale of the online food and grocery delivery company, according to a report from ET. Sources familiar with the matter have indicated that the major sellers in this IPO will be the existing investors of Swiggy.
The Dutch-listed investment arm of the South African conglomerate Naspers has been actively seeking to decrease its stake in Swiggy, aiming to bring it below the current 33%. Despite ongoing talks with potential investors, these efforts have yet to achieve success. According to Indian regulations, holding a stake of 26% or more qualifies a shareholder as a promoter, leading to restrictions on post-IPO share sales.
As Swiggy gears up to file its draft IPO papers in the forthcoming months, sources indicate that the $1 billion IPO is anticipated to include a minimum of $600 million in an offer for sale by existing investors.
Continue Exploring: Swiggy may file IPO by fiscal year end, plans to raise capital with combination of offer-for-sale and new issue; Prosus contemplates stake reduction
Swiggy’s spokesperson opted not to comment, and an email directed to Prosus remained unanswered until the press time.
While Swiggy is in the process of preparing its IPO papers, insiders reveal that Boat, the New Delhi-based wearables and audio accessory brand, is contemplating a reconsideration of its plan to go public in 2024. This comes after Boat withdrew its draft red herring prospectus (DRHP) filed with the Securities and Exchange Board of India in 2022, citing challenging market conditions.
However, one of the sources mentioned that it still intends to proceed with a public share sale.
Several new-age companies are seeking to make their debut on the stock market, following a turbulent 12-18 months for technology-led startups on local exchanges. In recent weeks, FirstCry, Ola Electric, Mobikwik, and Unicommerce have submitted their draft IPO papers and are anticipated to go public later this year.
Swiggy aims to file draft IPO papers by the end of the current fiscal year, but the timeline could change, according to individuals familiar with the matter.
Continue Exploring: Preparations in full swing as Swiggy nears mega IPO launch later this year
“Prosus has been in talks with several investors to dilute the stake in Swiggy as part of a broader strategy to do secondaries (sale of shares) across portfolio firms, but it hasn’t worked out due to a valuation mismatch in Swiggy,” a person aware of the matter said.
Prosus, having invested around $1 billion in Swiggy, aims to shed the promoter tag to attain greater autonomy in managing the investment post the IPO.
SoftBank, with a 46% stake in the hospitality chain Oyo, also faces a similar situation. However, in the case of FirstCry, SoftBank reduced its holding to around 25.5% before the company filed the DRHP in December, from more than 30% at one point in time.
Boat, the audio-product maker, is scheduled to meet with investment bankers later this month to review its IPO plans.
“There is definite interest to relaunch the IPO as there is momentum in the market. They (Boat) will take a call on it soon,” a person aware of the matter said.
Aman Gupta, co-founder and Chief Marketing Officer of Boat, declined to comment on the matter.
In October 2022, it pulled back the DRHP after securing $60 million in funding.
Besides Gupta, Sameer Mehta, the other co-founder of Boat, also serves as its chief executive. He assumed this position after Vivek Gambhir was appointed chairman last year.
In 2022, Imagine Marketing, the parent company of Boat, submitted the DRHP to Sebi with the intention of raising INR 2,000 crore. This comprised a fresh issue of shares amounting to INR 900 crore and an offer for sale of shares valued at up to INR 1,100 crore.
Mobikwik is another firm that had initially postponed its IPO after filing its DRHP in July 2021. However, in a recent move, the company has refiled its draft papers with Sebi this month, aiming to raise INR 700 crore through a primary share sale.