How Swiggy IPO will make hundreds of its employees crorepatis

For many Swiggy employees, today is the big day.

The food delivery company’s Rs 11,000 crore Initial Public Offering (IPO) was listed on the Indian stock market today (13 November).

According to a report in Moneycontrol, the IPO is set to make hundreds of Swiggy employees crorepatis.

But what do we know about the IPO? How will this happen?

Let’s take a closer look:

A brief look at Swiggy IPO

First, let’s briefly examine the Swiggy IPO.

The issue opened for public subscription on November 6 and ended on November 8.

The Bengaluru-based company was looking to raise Rs 11,327 crore from the IPO –  which comprised a fresh issue of shares worth Rs 4,499 crore along with an offer for sale (OFS) of Rs 6,828 crore.

On Friday, the final day of the share sale, the IPO was fully subscribed.

The IPO ended with 3.59 times subscription.

Swiggy had set a price band of Rs 371 to Rs 390 per share for its maiden public issue.

Swiggy offered a lot size of 38 shares and offered employees a discount of Rs 25 per share.

Swiggy Food Marketplace CEO Rohit Kapoor HAD said, “We feel we have priced it right and we are looking forward to the next few days.”

Swiggy had been valued at $11.3 billion (around Rs 95,000 crore) at its upper price band.

Rival Zomato, which went public in July 2021, has a market valuation of Rs 2.13 lakh crore.

How will employees become crorepatis?

On Wednesday, Swiggy shares listed at a premium of nearly eight per cent against the issue price of Rs 390.

The stock initially listed at Rs 412 – a 5.64 per cent hike from the issue price on the BSE.

Later, it surged 7.67 per cent to Rs 419.95.

On the NSE, shares of the firm made the market debut at Rs 420 – a 7.69 per cent increase.

The company’s market valuation stood at Rs 89,549.08 crore during the early trade.

People familiar with the matter told Moneycontrol that 500 employees will make around Rs 1 crore each from the IPO.

The IPO will, in all, place Rs 9,000 crore in the hands of 5,000 employees who have been with the company for many years.

Of these, 500 employees will become crorepatis.

This is all thanks to the company’s Employee Stock Ownership Plan (ESOP) – which grants company stock to employees usually based on the length of their tenure – which is amongst the biggest in India’s start-up culture.

The outlet previously reported that Swiggy co-founders Sriharsha Majety, Nandan Reddy and Phani Kishan, food marketplace CEO Rohit Kapoor, Swiggy Instamart head Amitesh Jha, CFO Rahul Bothra, HR head Girish Menon and CTO Madhusudhan Rao and others got $200 million (Rs 1,600 crore) in ESOPs ahead of the IPO.

According to The Times of India, Swiggy employees can sell their shares a month after the IPO.

This is because the company in July secured an exemption for the one-year mandatory waiting period from the Securities and Exchange Board of India (SEBI).

Prior to Swiggy, Walmart-owned Flipkart had distributed $1.4-1.5 billion (Rs 11,600-12,500 crore) to its current and former employees.

This included $700 million (Rs 5,800 crore) to 17,000 current and former employees in July 2023.

The company also carried out five share buybacks worth $1.4-1.5 billion (Rs 12,000 crore) in the past few years.

The issue comes amid a series of IPOs in the recent past, including South Korean car maker Hyundai’s mega ₹ 28,000-crore issue.

Swiggy, founded in 2014, posted a loss of Rs 611 crore in the quarter ended June 2024, narrowing from Rs 564 crore in the same period last year.

It expanded into quick commerce in 2020.

Going by the draft papers, the company plans to utilise proceeds from the fresh issue for investing in technology and cloud infrastructure; brand marketing and business promotion; and debt payment; and funds will also be allocated for inorganic growth and general corporate purposes.

With inputs from agencies