Will Swiggy's retail shareholders get any preference while booking orders? Here's what CFO says

In an exclusive interaction with Business Today TV on Thursday, IPO-bound Swiggy Ltd's top management spoke at length on a range of topics starting from the offer-for-sale (OFS) size to Swiggy shareholders' benefits, if any, at the time of booking orders.

Sharing the reason behind reducing the OFS size, Swiggy CFO Rahul Bothra said, "Our largest investor process group had to come below the regulatory threshold of 25 per cent as we have increased the primary offering by 20 per cent. Apart from the process group, most of the OFS sellers are the early investors who have come on the journey right from 2015 along with the company. The company has reduced its estimated valuation from the initial public offering to $11.3 billion from an earlier estimation of $15 billion.

While answering a question on why retail investors should apply for the IPO, Swiggy's Managing Director and Group CEO Sriharsha Majety said, "Anyone who's considering an investment should be excited about the idea of investing into consumption in India at scale and that's a secular story which is not going away anywhere over the next one or two decades. The next two decades are all about consuming more and that base itself growing. Swiggy is one way to take a bet on that broader story. The company's business is the sum of many parts. The food delivery business is growing steadily and has demonstrated profitability. We expect it only to increase in the next few years. The quick commerce business is in a different stage, where it is going through hyper-growth."

In response to a query on local 'kirana' stores, Bothra said, "Last year, we acquired a business called Link. It is an authorised distributor of FMCG companies, selling to tens of thousands of kiranas on a daily and weekly basis. We are currently working with more than 20 large FMCG brand partners and we are now helping kiranas unlock real-time inventory ordering. Getting them access to speedier deliveries and better fill rates as kirana stores do suffer low fill rates because of the distribution challenges that exist in the current network. We are trying to bring kiranas the benefits of technology that we have used on the B2B side and get them access to promotions and discounts from the brand directly sourced so that they can cater to the neighbourhood that they service to. Bringing them to a level playing field is the need of the hour and we are committed to doing that through our Link business." For the unversed, the fast expansion of quick commerce in the country has led to the closure of many kirana stores.

When asked whether there will be any preference given to shareholders while booking orders from Swiggy, Bothra said, "We are looking at that expect. If regulatory considerations are there, we will definitely try to give more value benefits to our retail shareholders, given the regulations currently in there."

SoftBank-backed Swiggy is scheduled to launch its initial share sale on November 6. The IPO price band is set at Rs 371 to Rs 390 per share. The minimum lot size for an application is 38 shares. The minimum amount of investment required by retail investors is Rs 14,820. The IPO of India's second-largest food delivery platform combines a fresh equity issuance of Rs 4,499 crore with an OFS of 17.5 crore shares by existing shareholders.

It has reserved 75 per cent of the net for the qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will get 15 per cent of the net offer. The remaining 10 per cent of the net offer will be allocated towards the retail investors.