“The strong response to our QIP from both global and domestic institutional investors, including new investors since our IPO last year, reflects deep confidence in Swiggy’s business fundamentals, disciplined execution and long-term value creation roadmap,” Sriharsha Majety, founder and group CEO of Swiggy, said in a statement.
Increased competition
“The additional capital gives us the flexibility to strengthen our core businesses, scale Instamart while maintaining financial prudence and invest in innovation to continue delivering unparalleled convenience,” he added.
ET had reported on Wednesday that most of the bids received by the company were around Rs 375 per share.
The fundraising takes place in a context of increased competition in the fast trading segment. The new capital takes Swiggy’s cash balance to around Rs 15,000 crore. The company expects to raise another Rs 2,400 crore once the sale of its stake in urban mobility startup Rapido is completed.
More than 80% of Swiggy’s QIP was subscribed by domestic investors, with mutual funds such as ICICI Prudential, SBI Mutual Fund and Aditya Birla Sun Life accounting for 37% of the issuance. ICICI Prudential was the largest buyer, with 16% of the placement allocated to ICICI. Other global investors participating in the QIP included Temasek, the Norwegian global pension fund, Vanguard, Capital Group, Nomura and Goldman Sachs.Swiggy had earlier said it would deploy Rs 4,475 crore from the QIP revenue for expanding its high-speed commerce network.
Fast commerce unit Instamart is locked in a battle for market share with 10-minute delivery players including market leader Blinkit, Nexus Venture Partners-backed Zepto and Tata Digital-backed BigBasket, besides Flipkart and Amazon. Zepto is expected to file its confidential paperwork for its initial public offering (IPO) soon.
Swiggy’s consolidated cash burn rose to Rs 740 crore in the September quarter, higher than Eternal’s, with Instamart accounting for a major share. By September, the company had already used up more than 80% of the proceeds from its November 2024 initial public offering, mainly to finance rapid trading losses.
ET had first reported on Swiggy’s QIP plans on October 30. This was Swiggy’s first capital raise since its initial public offering in November 2024, when it raised around Rs 4,500 crore.
With the segment’s three largest players, Blinkit, Zepto and Instamart, operating at a loss, industry executives have also raised questions about the public markets’ willingness to support further cash burn.
Blinkit CEO Albinder Dhindsa told ET in an interview on December 2 that public markets’ interest in providing capital to the fast-trading sector to finance balance sheet-backed expansion was limited. He underlined that the sector will soon have to deal with questions surrounding sustainable growth.
US retail company Amazon is also expanding its fast commerce business. Senior vice president for emerging markets Amit Agarwal told ET in an interview last week that the company had seen strong traction in cities where its fast trading service had been launched, taking on Eternal-owned Blinkit, Swiggy’s Instamart and Zepto in an increasingly competitive fight for customer wallet share in India’s key urban markets.
According to BofA Research, Blinkit, the fast commerce leader, has a market share of over 50%, with the rest spread among Zepto, Instamart, Tata Digital-backed BigBasket, Flipkart Minutes and Amazon Now.
Walmart-owned Flipkart, Amazon’s biggest e-commerce rival in India over the years, is also in the 10-minute delivery segment and is on track to have 800 dark stores by the end of this year.
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