The Indian internet stock market has long been considered a mystery, with many analysts eager to compare it to its global counterparts. This Wednesday, Swiggy will finally provide the answer, listing on the public markets and joining the ranks of the likes of Zomato and Nykaa.
A $1.4 Billion Fundraising Effort
Swiggy has secured a whopping $1.4 billion from institutional investors, including Norway’s sovereign wealth fund and eight of India’s top 10 mutual funds. Despite this significant fundraising effort, Swiggy will still enter a public market where large tech companies have struggled historically.
The Market’s Track Record
Three years ago, Paytm raised $2.5 billion in its IPO but is now trading at 47% below its listing price. Nykaa and Star Health are also struggling to maintain their value, with prices down by 53% and 48%, respectively. Meanwhile, startups that have raised less than $500 million in India have performed surprisingly well.
India’s Tech IPO Surge
The U.S. market may be muted, but India has emerged as a hotspot for tech IPOs this year. Many growth-stage startups and their investors are keeping a close eye on Swiggy’s listing, which could pave the way for similarly large listings in the next 24 months.
Regulatory Compliance
For many Indian startups, regulatory compliance is a significant hurdle. With Swiggy’s IPO, it will be interesting to see how willing investors are to bet on business models that prioritize growth over profits amid challenging global conditions.
Swiggy’s Quick-Commerce Model
Swiggy’s quick-commerce model has been successful in major Indian cities but has raised doubts about its viability in smaller towns and cities. CEO Majety expressed concerns about extending the model to city number 500, saying "Honestly, I don’t know."
Investor Expectations
Dutch investor Prosus is expected to see a threefold return from Swiggy’s listing, making it their biggest hit from India. Accel, another major investor, could see a more than 35-fold return, one of its largest in the past five years.
Conclusion
Swiggy’s IPO will be a significant test of India’s appetite for tech listings. With high expectations and regulatory challenges looming, it remains to be seen whether Swiggy can replicate its success in smaller cities and towns.
