SUMMARY
Baron Capital estimated the Swiggy’s fair value at $50.9 Mn at the end of December 2023, which pegged Swiggy at $7.3 Bn
The asset management picked up 11,578 shares of Swiggy in January 2022 for $76.8 Mn
The new downgrade comes as big unicorns such as BYJU’S, Ola, Pine Labs and PharmEasy grapple with valuation cuts by investors
The saga of valuation cuts continues as foodtech major swiggy
, now, seems to be enduring its third markdown in the past seven months.
US-based asset management company (AMC) Baron Capital has reportedly slashed the valuation of the decacorn in its books by 34%, pegging it at $7.3 Bn. The Bengaluru-based giant last raised $700 Mn in funding in January 2022 at a valuation of $10.7 Bn.
As per the filings with the US Securities and Exchange Commission (SEC) seen by Moneycontrol, Baron Capital estimated the fair value of its shares in Swiggy at $50.9 Mn at the end of December 2022. Baron owns a 0.7% stake in the foodtech major, which implies a valuation of $7.3 Bn for Swiggy.
According to the available data, Baron Capital picked up 11,578 shares of Swiggy in January 2022 for a consideration of $76.8 Mn and has now given the stake price a haircut of more than 30%.
Inc42 reached out to Swiggy for a comment. This story will be updated with the statement when it is received.
This is not the first time that Swiggy has seen a markdown from investors. The latest markdown comes barely a week after Invesco slashed the valuation of its portfolio startup Swiggy, for the second time, to 5.5 Bn. In January 2023, Invesco initiated an internal markdown of the foodtech major’s valuation.
The markdown is part of a growing trend that has seen global investors slash down the valuation of their Indian unicorn portfolios. The past week has seen US-based investment firm Vanguard Group internally cut the valuation of ride-hailing startup Ola by 35% to $4.8 Bn, while Neuberger Berman marked down the value of its stake in two major startups Pine Labs and epharmacy PharmEasy by 38% and 21%, respectively.
In the past few months, BlackRock has cut the value of its stake in edtech BYJU’S by nearly half, while Prosus internally slashed the valuation of the edtech decacorn by 73% in November last year.
The plummeting internal valuation has cast the spotlight on the ballooning valuations of many Indian unicorns. Despite raking up heavy losses, having no clear path to profitability and fizzling out of pandemic growth, these unicorns continue to enjoy hefty valuations. This has not gone down well with multiple investors, who have taken multiple such internal markdowns to push for corrections in the larger market.
Speaking with Inc42 earlier last week, angel investor Gaurav VK Singhvi said that he expected the valuation cuts to continue for at least the next six months, adding that it was highly likely that the trend could permeate into the growth-stage startup ecosystem as well.
Curiously, Swiggy’s new valuation on Baron Capital’s books stands slightly higher than listed competitor Zomato’s current market capitalisation. At the end of May 15, Zomato’s m-cap hovered around the 54,474.61 Cr ($6.6 Bn) mark, despite having a market share of 55% compared to Swiggy’s 45%.
The valuation cuts come amidst the reports that the food delivery major was looking to list on bourses. While there has been no clarity on when it plans to go for an IPO, the emergence of state-backed initiatives such as ONDC has complicated matters for Swiggy.
Swiggy has also been hit by growing losses and layoffs amid a detrimental market environment that has dried up funding for most Indian startups. With the situation expected to continue well into 2023, Swiggy has gone on a cost-cutting overdrive, looking to shut loss-making verticals and sprucing up the focus on quick commerce.
But, with Swiggy facing the brunt of the valuation cuts season, it remains to be seen whether these internal markdowns percolate and impact real valuations of the unicorn ecosystem.
