Baron Capital’s Confidence Pushes Swiggy’s Value Up By 13% To $12.1 Bn
US-based asset manager Baron Capital Group has significantly raised the fair value of Swiggy marking it at USD 12.1 billion. This valuation means a 13 per cent increase from its previous value of USD 10.7 billion, which Swiggy attained during its last fundraising round in 2022.
The rise in valuation by Baron Capital, which participated in Swiggy's USD 700 million funding round in January 2022, shows a good outlook on the company's future prospects. Interestingly, this optimistic stance is in stark contrast to the trend observed among other Indian startups, such as Ola Cabs, Meesho and Byju’s, which have faced successive reductions in valuations by various investors including Fidelity, BlackRock, and Vanguard.
Baron Capital's confidence in Swiggy is further evidenced by its increased stake in the company. As of 31 December 2023, the asset manager's fund held a stake worth USD 87.2 million in Swiggy’s parent company Bundl Technologies, a 17 per cent increase from the previous quarter.
Additionally, Swiggy's parent company recently changed its registered name from Bundl Technologies Pvt Ltd to Swiggy Pvt Ltd, a move aimed at enhancing brand identity and visibility.
Despite its soaring valuation, Swiggy faces stiff competition from its chief rival Zomato. Baron Capital also holds stakes totaling over USD 11 million in Zomato, which experienced a 22 per cent surge in share price between 30 September and 31 December.
Swiggy is interestingly not just confined to food delivery anymore; it has diversified its operations into the quick-commerce space under the Instamart brand and the dining segment under the Dine Out brand, besides offering parcel delivery services.
Baron Capital's emerging markets fund noted in its quarterly update that Swiggy is well positioned to capitalise on the structural growth in online food delivery in India. The company's growth prospects are underpinned by factors such as a burgeoning middle class, rising disposable income, and increasing smartphone penetration.
Swiggy's upward trajectory is also reflected in its plans for an initial public offering (IPO) worth USD 1 billion. The IPO is expected to have an offer-for-sale component worth at least USD 600 million and will see existing investors offloading some of their stakes.
Despite Swiggy's impressive growth, it faces challenges, including widening losses. While its operating revenue surged by 45 per cent year-on-year to Rs 8,265 crore for the fiscal year ended March 2023, its net loss widened by 15 per cent to Rs 4,179 crore during the same period.
