In a key development, auto ancillary company Hindustan Composite has acquired a minority stake in IPO-bound online food delivery company Swiggy. The strategic investment by Hindustan Composite comes close on the heels of a similar move by Amitabh Bachchan’s family office and underlines the growing interest by investors in the Bengaluru-based food delivery giant.
PC: Business Today
The board of Hindustan Composite has inked an agreement with Swiggy to purchase 1,50,000 equity shares, amounting to a valuation of Rs 5.17 crore. The investment reflects the objective of Hindustan Composite to ensure short-term benefit accrual and long-term benefits through its association with Swiggy, which is a key driver in the evolving food delivery market.
Net worth for Swiggy stands at Rs 9,810 crore or $1.18 billion, according to the disclosure in March 2023 through NSE, due to the strong financial position of the company. Hindustan Composite said it hoped to complete the minority investment by November 30, 2024, as a strategic portfolio investment.
Swiggy reportedly filed the IPO papers confidentially in May and is preparing to raise sizeable funds via its public issue. It intends to raise up to Rs 3,750 crore ($450 m) through a fresh issue of equity shares and offer for sale of up to Rs 6,664 crore ($800 m) in the IPO. Media reports suggest that Swiggy may file preliminary IPO papers with the Securities and Exchange Board of India, declaring its plan to go public.
Swiggy recently opened its fifth ESOP liquidity programme worth $65 million in July this year ahead of the IPO. The company further claims to have facilitated over Rs 1,000 crore of ESOPs liquidity across five events for a total of 3,200 employees while reinforcing its commitment to reward and retain top talent.
It further strengthened its leadership with the appointment of a new CEO and COO, in an attempt to reinforce management capabilities and facilitate business growth. Having posted revenues of Rs 5,476 crore for the first three quarters of FY24, notching a loss of Rs 1,600 crore, Swiggy will be better equipped to use its market position and brand equity as an anchor to deal with the fluid food delivery marketplace.
This compares to a valuation of $28.3 billion for Swiggy’s rival Zomato, according to stock exchange data. The Deepinder Goyal-led firm posted revenues of Rs 4,206 crore and profits of Rs 253 crore in the three months to June this year, reflecting intense competition but also high growth potential in food delivery.
If Hindustan Composite goes ahead with the investment in Swiggy, the joint effort put forward by both firms is likely to promise a guarantee for mutual growth and value creation in the growing online food delivery market.
