Hyundai India's shares took a notable hit, dropping by 7.2% on debut due to retail investors' concerns over high valuations. Amid this challenging market, Swiggy-backed by SoftBank and Prosus-has reduced its IPO valuation to USD 11.3 billion, down 25% from an initial USD 15 billion. This decision, guided by investor feedback, prioritizes IPO success amid global uncertainties, including the upcoming US presidential election. Swiggy's move comes as India's IPO market remains strong, with 270 companies raising USD 12.57 billion this year. Notably, BlackRock and CPPIB plan to invest in Swiggy's USD 1.4 billion IPO, aiming to secure its position in India's competitive market.
Hyundai India's shares faced a significant setback, declining by 7.2% on their debut earlier this week. This disappointing performance can be attributed to a lukewarm reception from retail investors, who expressed concerns about the company's lofty valuation. In the midst of this market turbulence, Swiggy-supported by major investors such as SoftBank and Prosus-is keenly aware of the challenges ahead. The company is determined to avoid a lacklustre response to its IPO, which is substantial in size, especially considering the global uncertainties surrounding the upcoming US presidential election on November 5.
To adapt to the shifting sentiment in the market, Swiggy has made the strategic decision to slash its IPO valuation once more, reducing it to USD 11.3 billion. This figure represents a 25% decrease from its original target of USD 15 billion. According to a report by Financial Express, sources familiar with the situation revealed that the company took this step following consultations with investors, as it prioritises the need for a successful IPO over maintaining an inflated valuation.
In 2022, Swiggy achieved a valuation of USD 10.7 billion during its last funding round, which was led by Invesco. This historical context highlights the company's previous strong positioning in the market, making the current decision to lower its valuation all the more significant.
Despite these recent setbacks, India-s IPO market has remained remarkably buoyant, with around 270 companies successfully raising USD 12.57 billion so far this year. This figure is already well above the total of USD 7.4 billion raised throughout the entirety of 2023, demonstrating a resilient market environment amid ongoing volatility.
In a further development, it has been reported that BlackRock and the Canada Pension Plan Investment Board (CPPIB) will be investing in Swiggy's upcoming USD 1.4 billion IPO. This investment is poised to make Swiggy's offering the second-largest stock listing in India this year, signalling continued interest from significant institutional investors. However, both Swiggy and the investment firms did not immediately respond to inquiries for comment outside regular business hours.
The broader market environment has not been without challenges. Indian shares have experienced declines for four consecutive weeks, marking the longest losing streak since August 2023. During this period, the benchmark Nifty 50 index has fallen by over 8% from the record highs achieved in late September. This downward trend is largely attributed to persistent foreign selling pressures, which have raised concerns among investors regarding the stability of the market moving forward.
As Swiggy prepares for its IPO amidst these fluctuating conditions, the company is acutely aware of the delicate balance it must strike between attracting investors and addressing the prevailing market sentiments. The coming weeks will be crucial for Swiggy as it navigates this challenging landscape, aiming for a successful IPO that aligns with its long-term goals and ambitions in the competitive food delivery sector.
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