Invesco cuts Swiggy valuation to $8 billion internally as tech stocks bleed

Invesco’s move to mark down Swiggy’s valuation internally comes at a time when many investors are reevaluating valuations of technology companies across the globe

Invesco, a US-based asset management company, has slashed food tech and grocery delivery platform Swiggy’s valuation in its books to $8 billion, in another instance of a internal markdown by an investor of a high-flying Indian startup.

In its regulatory filings for the quarter ended September 2022, Invesco has pegged Swiggy’s valuation at $8 billion down from $10.7 billion when it made the investment.

Invesco first invested in Swiggy in January last year, when it led a massive $700-million funding round for the SoftBank-backed platform.

Queries sent to Swiggy did not elicit a response at the time of publishing, and this story will be updated if the company responds.

Invesco’s move to mark down Swiggy’s valuation internally comes at a time when many investors are reevaluating valuations of technology companies across the globe. In September, SoftBank had reportedly marked down Oyo’s valuation from $10 billion to $2.7 billion, while in November, Prosus pegged the fair value of its 9.67 percent stake in Byju’s at $578 million owing to an accounting change, which suggested that it recorded Byju’s valuation at about $6 billion. Byju’s last known valuation was $22 billion.

Earlier on March 31, a report by online news website The Arc suggested that Blackrock, the world’s biggest asset management company, slashed Byju’s valuation by 50 percent internally.

Moreover, Swiggy's markdown follows a deep selloff in the shares of Zomato, Swiggy’s biggest rival, over the last 12 months. Zomato’s market capitalisation has dropped close to 40 percent in the last 12 months. As of March 31, Zomato’s market capitalisation was Rs 42.54 thousand crore or about $5.2 billion.

Founded in 2014 by Sriharsha Majety, and Nandan Reddy, Swiggy started off as a food delivery platform and later diversified into grocery delivery with Swiggy Instamart, and restaurant hunting with the acquisition of Dineout.

The company’s losses more than doubled in FY22 to Rs 3,628.9 crore from Rs 1,616.9 crore in FY21. Swiggy’s operating revenue, however, also, more than doubled to Rs 5,704.9 crore in FY22. But Swiggy has been aiming for profitability.

In January this year, the company laid off 380 employees — or 3 percent of its staff — which it said was part of a restructuring exercise.

To further rationalise costs, Swiggy also shut down its meat marketplace and cloud kitchen business. Earlier this month,  Swiggy sold its cloud kitchens business in a share swap deal with Kitchens@.

“The growth rate for food delivery has slowed down versus our projections (along with many peer companies globally ). This meant that we needed to revisit our overall indirect costs to hit our profitability goals..,” co-founder Sriharsha Majety had written in an email at the time.

According to a note by HSBC this month, rival Zomato’s market share has been increasing due to its loyalty programme. In FY24, the report expects the market shares of Zomato and Swiggy to be at 57 percent and 43 percent, respectively.

Note: An earlier version of this article said that Invesco had marked down Swiggy's valuation to $5.3 billion erronously. This has now been updated to $8 billion. The error is regretted.