Swiggy shareholder Prosus may receive promoter tag in platform's IPO launch

Prosus, the largest shareholder in Swiggy, may be classified as a promoter in the upcoming initial public offering (IPO) of the online food and grocery delivery company, according to a report by The Economic Times (ET). Prosus, the Dutch-listed investment arm of South African conglomerate Naspers, has been attempting to reduce its holding in Swiggy from 33 per cent to below 26 per cent. However, talks with potential investors for the stake reduction have not been successful.

Under Indian regulations, a shareholder holding 26 per cent or more is considered a promoter, subjecting them to restrictions on the shares they can sell post-IPO. Swiggy's anticipated $1 billion IPO is expected to include at least $600 million in offer-for-sale by existing investors. Swiggy, based in Bengaluru, is preparing to file its draft IPO papers in the coming months. Both Swiggy and Prosus declined to comment on the matter.

US asset manager Invesco had increased the valuation of the Indian food delivery platform in October 2023 to $8.3 billion from $7.85 billion, marking a second consecutive markup. Invesco, a minor shareholder in Swiggy with a two per cent stake, valued its shares at $147.6 million as of October 2023.

Swiggy is targeting a listing between July and September. In May of the previous year, Swiggy announced that its core food delivery business had turned profitable after nearly nine years since the platform was launched. However, its grocery delivery service, Instamart, was still incurring losses.

According to media reports, in the first half of 2023, Swiggy held around 46 per cent of the market share, the rest going to its largest competitor Zomato. Zomato launched its IPO in July 2021, between Rs 72-76 per share, with a face value of Rs 1 per share. At the time of launch, it received a strong response from investors.