US-based Baron Capital has slashed foodtech platform Swiggy’s fair value by another 10 percent, effectively valuing the company at $6.5 billion as of March 31, 2023. The US-based fund had cut Swiggy’s fair value by 34 percent as of December 31, 2022.
Baron Capital has estimated the fair value of its stake in Swiggy at $45.76 million as of March 31, 2022, according to the investor’s filings with the Securities and Exchange Commission (SEC). Baron Capital holds about 0.7 percent stake in Swiggy, and its fair value estimate implies a $6.54 billion valuation for the foodtech unicorn.
Baron Capital invested in Swiggy in January last year and according to the SEC filings, it paid $76.8 million for 11,578 shares of the foodtech platform, valuing Swiggy at $10.96 billion. Swiggy declined to comment.
The implied valuation of Swiggy, as per Baron's fair value estimate, is now lower than the market capitalisation of its biggest rival, Zomato. Zomato, which was listed in mid-2021, currently has a market capitalisation of around Rs 57,000 crore or around $6.6 billion as of May 26, assuming the value of one US dollar to be Rs 80. However, as of March 31, Zomato had a valuation of less than $5 billion.
Swiggy last raised funds in January 2022 at a valuation of $10.7 billion, which made it one of the most valuable startups in the country. However, the company's valuation has been in hot water since then, with Baron Capital and Invesco slashing its fair value in subsequent months.
Typically, private market valuations chase public market valuations and that seems to be the case with Swiggy. Zomato, at its peak, had a market capitalisation of more than $15.5 billion, which has more than halved since the start of 2022. With Zomato’s valuation hovering between $4-7 billion in the past year, investors seem to have pegged Swiggy’s valuation at around $6 billion, according to industry observers.
Baron Capital has now slashed the fair value of Swiggy for the second time in three months, similar to the US-based asset management company Invesco. Invesco effectively halved Swiggy's valuation to $5.5 billion as of January 31, 2023. In October, Invesco first reduced Swiggy's valuation to $8 billion and later further cut it to $5.5 billion.
Many US-based asset management companies (AMCs), including Baron Capital, have reduced the fair values of Indian startups due to the declining valuations of technology companies worldwide. Moneycontrol reported earlier this month that Vanguard lowered the valuation of the ride-hailing platform Ola to $4.8 billion.
BlackRock, one of the world's biggest asset management companies, has also halved the fair value of Byju's, the world's most valued edtech firm. The fair values of online e-pharmacy platform Pharmeasy and fintech platform Pine Labs have also been marked down.
Founded in 2014, Swiggy started as a food delivery platform and later diversified into grocery delivery and hyperlocal delivery services. The company is betting big on grocery delivery or quick commerce of late. But just like most startups, Swiggy has slashed costs significantly since the start of 2022 to extend the runway. On May 15, Moneycontrol reported how Swiggy halved its monthly cash burn rate from $45-50 million to $20 million.