Modern Insulators Buys Swiggy Shares Worth INR 5 Cr Ahead Of IPO

Listed porcelain insulators manufacturer Modern Insulators is making a “long-term investment” worth almost INR 5 Cr in Swiggy as the foodtech major prepares for its $1.25 Bn initial public offering (IPO).

In an exchange filing on September 17 (Tuesday), the company said it has secured approval from its board to acquire over 1.38 Lakh unlisted shares of Swiggy for INR 360 apiece for INR 4.99 Cr in an all-cash deal. 

The transaction is expected to be completed in the next 30-45 days, the filing showed. Swiggy’s unlisted shares that will be lapped up by Modern Insulators will translate to a 0.007% stake in the IPO-bound startup.

Founded in 1985, Modern Insulators claims to be India’s biggest manufacturer and exporter of porcelain insulators used in electric and electronics appliances, as well as railway lines. 

The company posted a consolidated net profit of INR 36 Cr in the financial year 2023-24 (FY24), up 28% from INR 28.12 Cr in the previous year. Revenue from operations rose nearly 3% to INR 443.30 Cr during the year under review from INR 430.96 Cr in FY23.

Investors have been flocking to buy the unlisted shares of Swiggy ahead of its IPO, driven by a rally in the Indian equities market and rising interest in the public listings of new-age tech startups.

Earlier this month, Hindustan Composites said it would acquire 1.5 Lakh shares, or a 0.01% stake, of Swiggy for a cash consideration of INR 5.17 Cr. Actor Amitabh Bachchan’s family office also picked up a minority stake in the IPO-bound company.

The development comes on the heels of reports saying that Swiggy is looking to file its draft red herring prospectus (DRHP) with market regulator SEBI this week for an over $1 Bn IPO.

Earlier this month, it was also reported that Swiggy is planning to get shareholders’ nod to raise INR 5,000 Cr (about $600 Mn) through fresh issuance of shares in its IPO as against the previously planned amount of INR 3,750 Cr (around $450 Mn). The Swiggy IPO also comprises an offer for sale component worth INR 6,664 Cr (around $799 Mn).

As per multiple reports, Swiggy is eyeing a valuation of $15 Bn for its IPO. The food delivery and quick commerce startup was last valued at $10.7 Bn.

Swiggy is looking to go public even as it continues to be a loss-making entity. Its revenue grew 36% year-on-year (YoY) to INR 11,247 Cr in FY24, while net loss narrowed 44% YoY to INR 2,350 Cr. 

Last week, Inc42 reported that Swiggy has launched ‘Cafe’ to deliver snacks and beverages in 15 minutes in select parts of Bengaluru. 

In an effort to win market share back from its rival Zomato, Swiggy has launched a slew of features in recent months, including group ordering option, ‘incognito mode’ for private ordering, 10-minute food delivery, among others. Earlier this month, it also rolled out a pilot for a larger order fleet in the Delhi NCR region.