close
close

Prosus, Tencent made billions of dollars from Swiggy’s IPO

Posted on by Larry
Prosus, Tencent made billions of dollars from Swiggy’s IPO

It rained billions of dollars for global investment group Prosus and Chinese conglomerate Tencent as they cashed in from their investments in the initial public offering of Zomato rival Swiggy, which made its stock market debut on Wednesday with a valuation of more than $11 billion.

According to the company’s draft red herring prospectus (DRHP), Prosus invested nearly Rs 9,055 crore ($1.07 billion) in the online food platform and earned Rs 26,927 crore ($3.2 billion) in the IPO, making a profit of $2, 12 billion from its investment.

On the other hand, Chinese behemoth Tencent injected Rs 1,343 crore and earned Rs 3,166 crore, making over 135 percent profit (on the issue price of Rs 390).

Swiggy’s stock opened on the National Stock Exchange at Rs 420 per share, a 7.7 percent premium over its IPO price of Rs 390. At the close, Swiggy’s shares fell nearly 17 percent higher at Rs 456 per piece on the NSE.

The company’s IPO was oversubscribed by 3.6 times and consisted of a fresh issue of Rs 4,499 crore and an offer for sale (OFS) of 17.51 ​​crore shares worth Rs 6,828 crore with a price band of Rs 371-390 per share.

According to Sriharsha Majety, CEO of Swiggy, they expect very solid growth over the next three to five years. “We are expanding our geographic footprint and store network for our Instamart business,” said Majety.

According to Prosus, as a listed company, Swiggy is on a strong growth trajectory, having diversified into new categories and expanded into new cities. Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said that despite subdued market sentiment and slow response from general investors, Swiggy’s listing took market participants by surprise. “A positive listing and a share price above the issue price of 390 should be seen as strong demand for the company.

This shows that investors are positive about the space and the fear of missing out is preventing investors from missing out on the sector’s growth story, similar to the trend post-listing of Zomato,” he said.