US-based Baron Capital marks down Swiggy’s fair value by 34% after Invesco double blow

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US-based asset management company (AMC) Baron Capital has marked down the fair value of Swiggy in its books by 34 percent, following Invesco, which cut the foodtech platform’s valuation twice in the last four months, effectively bringing it to $5.5 billion as of January this year.

Baron Capital has estimated the fair value of its stake in Swiggy at $50.9 million as of December 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 $7.3 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.

Swiggy declined to comment.

The implied valuation of Swiggy as per Baron’s fair value estimate is slightly more than the market capitalisation of its biggest rival Zomato. Zomato, which got listed in mid-2021, had a market capitalisation of a little over Rs 53,000 crore or about $6.6 billion as of May 15, considering the value of one US dollar to be Rs 81. As on December 31, Zomato had a valuation of $6.3 billion.

Baron Capital has joined a growing list of US-based AMCs to cut the fair values of Indian startups amid falling valuations of technology companies globally. Besides Invesco and Baron Capital, Vanguard cut ride-hailing platform Ola’s valuation to $4.8 billion, Moneycontrol reported last week.

Blackrock, one of the world’s biggest AMCs, also halved the fair value of Byju’s, the world’s most-valued edtech firm. Online e-pharmacy platform Pharmeasy and fintech platform Pine Labs have also seen their fair values getting marked down.

Just like most startups, Swiggy’s valuation has been in the spotlight for a couple of months now. In March, Invesco first slashed Swiggy’s fair value in its books to $8 billion and later cut further to $5.5 billion. With Baron Capital also joining the list there might be concerns over the foodtech company’s valuation in the private market when it last raised funds at a whopping $10.7 billion valuation.

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.

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 burn rate from $45-50 million to $20 million.