Baron Capital Reduces Swiggy’s Valuation for Second Time in Three Months
- ByStartupStory | May 27, 2023
Baron Capital, a prominent investor in Swiggy, has recently devalued its stake in the food delivery company for the second time in three months. According to filings submitted to the US Securities and Exchange Commission (SEC), as of March 31, 2023, Baron Capital valued Swiggy at $45.76 million. The investment cost during this period was reported as $76.78 million.
Baron Capital, as part of Swiggy’s $700 million funding round in January 2022, invested in the food delivery firm and currently holds approximately a 0.75% stake through its Baron Emerging Markets Fund. In May, the fund marked down its investment by 34% to $50.9 million, following a previous devaluation. In a separate development, Invesco, another major investor in Swiggy, also lowered the company’s valuation to $5.5 billion and reduced the valuation of its own stake from $10.7 billion to $8 billion, according to regulatory filings.
As Swiggy prepares for a public listing by the end of the year, the recent devaluation of its holding and the overall challenging market conditions underscore a challenging period for the food delivery firm. Intensifying competition and concerns over macroeconomic conditions have contributed to a cautious sentiment. The volatility in rival Zomato’s stock price has raised apprehensions about the food delivery business, particularly in the context of the economic downturn and its impact on consumer confidence.
BlackRock, a major investor in BYJU’S, has significantly reduced the valuation of its stake in the edtech firm by nearly 50%, amounting to approximately $11.5 billion. Additionally, Neuberger Berman, a US fund, recently adjusted the valuations of its holdings in healthtech company Pharmeasy and fintech firm Pine Labs.
Swiggy witnessed a significant rise in revenue, doubling its previous figures in FY22. However, the company also experienced a widening loss, reporting a loss of Rs 3,629 crore in FY22 compared to Rs 1,617 crore in the previous fiscal year. This loss was primarily attributed to higher expenses, which surged to Rs 9,574 crore from Rs 4,139 crore in the previous financial year.
Swiggy’s CEO, Sriharsha Majety, recently announced that the food delivery giant achieved profitability in March, marking a significant milestone since its inception in 2014. Moving forward, Swiggy will prioritize its expansion efforts in Tier II and III markets. In FY22, Swiggy reported a revenue of Rs 5,705 crore, a notable increase from Rs 2,457 crore in FY21. Prosus, one of Swiggy’s prominent investors, previously highlighted that the gross merchandise value (GMV) of Swiggy’s food delivery arm grew by 40% during the January-July period last year.
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