In a strategic move to diversify its investment portfolio, listed auto ancillary company Hindustan Composites has announced its acquisition of a minority stake in the foodtech giant Swiggy, which is gearing up for its much-anticipated IPO. The company disclosed this significant development in a filing with the Bombay Stock Exchange (BSE) on Monday.
Hindustan Composites has signed a share purchase agreement to acquire 1.5 lakh equity shares of Swiggy for a total cash consideration of INR 5.175 Cr. This acquisition translates to a 0.01% stake in the foodtech major.
“We wish to inform you that the company has entered into a share purchase agreement to acquire 1,50,000 equity shares of Re. 1/- each of Swiggy Limited by making an investment of INR 5.175 Cr,” Hindustan Composites stated in its BSE filing.
The company expects the transaction to be finalized by November 2024. “The equity shares acquired shall form part of the investment of the Company with (a) view to gain long term/ short term investment benefits,” Hindustan Composites added.
As per the BSE filing, Swiggy’s net worth stood at INR 9,810 Cr as of March 2023, reflecting the company’s robust financial standing ahead of its public listing.
This acquisition comes shortly after reports that the family office of actor Amitabh Bachchan had acquired a minority stake in Swiggy, purchasing shares from employees and early investors. Additionally, Raamdeo Agrawal, Chairman of Motilal Oswal Financial Services, has also reportedly bought into the foodtech firm.
Swiggy, which was valued at $10.7 Bn in its last funding round, is now targeting a valuation of $15 Bn in its upcoming IPO. The foodtech leader confidentially filed its draft red herring prospectus with the Securities and Exchange Board of India (SEBI) earlier this year, with plans to raise between $1 Bn and $1.2 Bn through the offering. The IPO proceeds are expected to fuel Swiggy’s expansion in the quick commerce segment, particularly by growing its network of dark stores under its Instamart brand.
A recent report by 360 One, an investor in Swiggy, pegged the company’s current valuation at $11.5 Bn.
Founded in 2014 by Sriharsha Majety, Nandan Reddy, Phani Kishan Addepalli, and Rahul Jaimini, Swiggy initially focused on food delivery before expanding into quick commerce with Instamart. The company also offers additional services such as Swiggy Genie and Minis stores.
Despite its growth, Swiggy remains a loss-making entity. The company reported a net loss of INR 4,179.3 Cr for the financial year 2022-23 (FY23), an increase of 15% from the previous fiscal year’s net loss of INR 3,628.9 Cr. However, Swiggy’s operating revenue saw a significant jump of over 40%, reaching INR 8,264.4 Cr in FY23, up from INR 5,704.9 Cr in FY22.
