Swiggy, the food delivery giant backed by SoftBank, is targeting a $15 billion valuation in its upcoming Initial Public Offering (IPO), according to a report by Reuters. The company plans to raise between $1 billion to $1.2 billion through the stock market offering, which could make it one of the biggest Indian IPOs of 2024.

Swiggy's Competitive Landscape and Quick Commerce Focus

Swiggy operates in the highly competitive online food delivery market, where it primarily rivals Zomato. Both companies have made significant investments in the quick commerce sector, which focuses on delivering groceries and other products within 10 minutes. This new segment is rapidly gaining traction, with Swiggy aiming to leverage its IPO proceeds to further expand its Instamart quick commerce business.

Shareholder and Regulatory Approval

In April 2024, Swiggy received shareholder approval to proceed with its IPO, with the goal of raising up to $1.25 billion. The company has reportedly filed a confidential draft with the Indian markets regulator, and it is expected that the filing will be cleared within the next month. Following this clearance, Swiggy will move forward with filing a public prospectus.

While the company is targeting a $15 billion valuation, this figure could change based on market conditions. Swiggy's most recent funding round in 2022, led by Invesco, valued the company at $10.7 billion.

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Strategic Use of IPO Proceeds

Swiggy plans to use the funds raised from the IPO to significantly expand its Instamart business. The company intends to open additional warehouses to improve its service and compete more effectively with Zomato, which currently has a market valuation of around $28 billion and has seen its shares more than double since its 2021 IPO.

As of now, Swiggy operates approximately 550 grocery warehouses across 35 cities. While Swiggy's food delivery business is profitable, the Instamart grocery delivery segment remains loss-making. However, the company is optimistic about the growth potential of quick commerce in India.

The Growing Quick Commerce Market

According to Goldman Sachs, quick commerce accounted for $5 billion or 45% of India's $11 billion online grocery market as of April 2024. The firm projects that quick commerce could capture up to 70% of the market by 2030, underscoring the strategic importance of this segment for Swiggy's future growth.

Conclusion

Swiggy's upcoming IPO is poised to be a major event in the Indian market, with the company targeting a valuation of around $15 billion. The proceeds will be crucial for expanding Swiggy's quick commerce business, enabling it to better compete with Zomato and capitalize on the growing demand for rapid grocery deliveries in India. As the IPO date approaches, all eyes will be on Swiggy to see how it navigates this pivotal moment in its growth trajectory.

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