The recently-concluded initial public offer (IPO) of Swiggy, which was subscribed nearly 3.6 times, made the issue's merchant bankers richer by Rs 275 crore, as per data disclosed in the red herring prospectus of the company.
Given the IPO size of Rs 11,327 crore, it was also the second-highest quantum of fee paid by a digital major making its entry in the public markets -- Paytm with an IPO size of Rs 18,300 crore had paid merchant bankers Rs 324 crore as fees for its IPO in 2021.
More importantly, however, Swiggy paid 3.11 percent (Rs 352.4 crore) of the IPO size as total expenses for the offer, which was higher than Paytm, which paid only 2.2 percent (Rs 411.5 crore) of the IPO size as total expenses.
Apart from the merchant bankers’ fee, the total expenses of an IPO include listing fees, SEBI charges, commissions paid to banks, processing fees of BSE & NSE, legal counsel fees, printing & stationery charges and advertising & marketing expenses among other things.
Meanwhile, the merchant bankers for the Swiggy IPO were Kotak Mahindra Capital Company, JP Morgan India, Citigroup Global Markets India, BofA Securities India, Jefferies India, ICICI Securities and Avendus Capital. Further, fees paid to the merchant bankers accounted for nearly 78 percent of the total issue expenses or 2.43 percent of the IPO size.
Some of the other digital majors that paid a hefty amount in terms of fees to merchant bankers include Zomato (Rs229.14 crore), Policybazaar (Rs 168.45 crore), Nykaa (Rs 148.35 crore), Ola Electric Mobility (Rs 145.04 crore) and Delhivery (Rs 104.70 crore), as per information disclosed in the RHPs of the respective companies.
Other digital majors like First Cry, Go Digit, Yatra Online, Ease My Trip, Ixigo and Unicommerce eSolutions have also made their debut on the bourses though the merchant banking fees was less than Rs 100 crore for each of the company.
The current calendar year has been a real good one for merchant bankers as the primary market has been on a record breaking spree with many marquee companies launching their IPO – the cumulative fund raising has already breached the Rs 1 lakh crore mark with nearly 75 firms hitting the markets.
Incidentally, while Swiggy has paid a whopping Rs 275 crore as fees to merchant bankers, it is nowhere close to Hyundai Motor India’s Rs 493 crore though the IPO size of the auto major – Rs 27,855 crore – was also significantly higher than the food delivery major.
However, for Hyundai Motor India, the total issue expense of Rs 624 crore amounted to 2.24 percent of the IPO size, lower than Swiggy’s 3.11 percent.
Data, however, further shows that historically digital companies or start-ups that have come to the stock markets have paid a higher proportion of fees and commissions for their IPOs. For instance, the total expense as a percentage of the IPO size for companies like Nykaa, Ola, Yatra Online, Ixigo, Ease My Trip and Go Digit among others was in the range of 4-11 percent.
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