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Prosus, the largest shareholder in Swiggy, may have to be tagged as a promoter of the online food and grocery delivery company for its upcoming initial public share sale, where its existing investors will be the major sellers, people aware of the matter said.
The Dutch-listed investment arm of South African conglomerate Naspers has been trying to bring its holding in Swiggy to below 26% from the current 33%, but its talks with potential investors haven’t been successful. Under Indian rules, a shareholder with a stake of 26% or more is termed a promoter, which puts restrictions on the shares it could sell after the IPO.
Swiggy’s $1 billion IPO is likely to have at least $600 million in offer for sale by existing investors, the people said, as the Bengaluru-based company prepares to file its draft IPO papers in the coming months.
A spokesperson for Swiggy declined to comment while an email sent to Prosus did not elicit any response till press time Monday.
While Swiggy prepares to file its IPO papers, New Delhi-based wearables and audio accessory brand Boat is likely to reconsider its plan to make an IPO in 2024, people in the know of its plans said. In 2022, it had withdrawn its draft red herring prospectus (DRHP) filed with the Securities and Exchange Board of India citing market conditions.
But it still has plans for a public share sale, one of the people said.
These are several new-age firms that are looking to go public, after a tumultuous 12-18 months on the local bourses for technology-led startups. FirstCry, Ola Electric, Mobikwik and Unicommerce filed their draft IPO papers over the past few weeks and are expected to list this year.
Swiggy is aiming to file draft IPO papers by the end of current fiscal year, but the timeline could change, people aware of the matter said.
“Prosus has been in talks with several investors to dilute the stake in Swiggy as part of a broader strategy to do secondaries (sale of shares) across portfolio firms, but it hasn’t worked out due to a valuation mismatch in Swiggy,” a person aware of the matter said.
Prosus, which had invested around $1 billion in Swiggy, has been trying to shed the promoter tag so that it could get more freedom to manage the investment after the IPO.
SoftBank, which holds a 46% stake in hospitality chain Oyo, also faces a similar situation. However, in FirstCry, SoftBank has reduced its holding in FirstCry to around 25.5% before the company filed the DRHP in December, from more than 30% at one point in time.
Audio-product maker Boat is slated to hold a meeting with investment bankers later this month to reconsider the IPO plans. “There is definite interest to relaunch the IPO as there is momentum in the market. They (Boat) will take a call on it soon,” a person aware of the matter said.
Boat cofounder and chief marketing officer Aman Gupta declined to comment on the matter.
In October 2022, it withdrew the DRHP after raising $60 million.
Besides Gupta, Sameer Mehta is the other cofounder of Boat. Mehta is also its chief executive, a position he took over after Vivek Gambhir was made chairman last year.
In 2022, Imagine Marketing, the parent of Boat, had filed the DRHP with Sebi to raise Rs 2,000 crore — a fresh issue of shares worth up to Rs 900 crore and an offer for sale of shares worth up to Rs 1,100 crore.
Mobikwik is another firm which had postponed its IPO after having filed its DRHP, in July 2021. It filed its draft papers again with Sebi this month to raise Rs 700 crore through primary share sale.
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