Indian food delivery startup Swiggy eyes $15 billion IPO

SoftBank-backed Indian food delivery startup Swiggy is preparing for an initial public offering (IPO) with a target valuation of approximately $15 billion, making it one of the largest in India this year. The ten-year-old startup aims to raise between $1 billion and $1.2 billion through this offering, Reuters reported, citing sources familiar with the situation.

Swiggy competes directly with Zomato in the food delivery market, and both companies have invested heavily in the fast-growing sector of quick commerce, where groceries and other products are delivered within 10 minutes.

In April, Swiggy secured shareholder approval for an IPO that could raise up to $1.25 billion. The company’s confidential filing is expected to receive clearance from India’s market regulator in the coming weeks. Once approved, Swiggy will proceed with filing a public prospectus, as reported by the sources who requested anonymity due to the private nature of the discussions, Reuters reported.

Swiggy’s targeted valuation is around $15 billion, though the final number may fluctuate. In response to a question from Reuters, the company declined to comment on what it referred to as “market speculation.”

Another source told Reuters that Swiggy intends to use the IPO proceeds to expand its quick commerce segment, Instamart, and to establish additional warehouses to better compete with Zomato. Since its 2021 IPO, Zomato’s shares have more than doubled, giving it a market valuation of approximately $28 billion.

We covered Swiggy back In November 2023 after US investment firm Invesco boosted its valuation of the company from $5.5 billion in May 2023 to $7.8 billion.

Goldman Sachs has projected that quick deliveries could account for $5 billion, or 45%, of India’s $11 billion online grocery market, with the potential to reach 70% by 2030.

Founded in 2014 by Nandan Reddy, Phani Kishan Addepalli, Rahul Jaimini, and Sriharsha Majety, Swiggy has established itself as a leader in on-demand food delivery, connecting customers with their favorite local restaurants. Swiggy currently operates around 550 grocery warehouses across 35 cities in India.

While Swiggy’s core food delivery service is profitable, sources say the grocery delivery unit, Instamart, is still operating at a loss. Instamart faces competition from major players like Tata-owned BigBasket and Blinkit, formerly known as Grofers (in which Zomato holds a stake). Competitors also include Amazon Fresh and Reliance Industries’ JioMart.

Swiggy’s platform features an intuitive app that allows users to browse local restaurant menus, place orders, and track deliveries. Beyond food delivery, the company offers a range of services, including laundry pickup and delivery, as well as the transportation of documents and parcels, catering to both businesses and individual customers.