IPO-bound Swiggy announces fifth ESOP liquidity programme worth $65 million

IPO-bound food and grocery delivery firm Swiggy announced its fifth ESOP (employee stock ownership plan) liquidity programme on Monday. As part of this initiative, Swiggy employees across levels and functions will have the option to receive liquidity of up to $65 million for their ESOPs.

Swiggy’s co-founders, Sriharsha Majety and Nandan Reddy, along with other employees of the firm will be selling some shares in the company’s upcoming ESOP programme, according to industry sources. They are also doing this in the run-up of the firm's initial public offering (IPO).

Company shares will be sold as part of the ongoing secondary transactions where the firm is valued at $9.3 billion, according to the sources.

This is the fifth liquidity event for Swiggy since 2018 and the third consecutive event after July 2022 and 2023, making it one of the few start-ups to consistently enable wealth-creation opportunities for its employees. So far, the company has cumulatively enabled over Rs 1,000 crore of ESOP liquidity over the five events, benefiting over 3,200 employees.

“Rewarding employees by unlocking wealth-creation opportunities as Swiggy grows has always been a key priority for us,” said Girish Menon, head of human resources at Swiggy. "Employees owning shares of their company creates alignment of incentives and a sharp focus on collaborative excellence, which is a virtuous cycle that we believe in and espouse. As we approach the milestone of a decade of consumer love for Swiggy, the latest ESOP event is an acknowledgment of our employees' contributions, and our commitment to sharing Swiggy’s success and growth with them."

Recently, Swiggy’s competitor Zomato reportedly approved ESOP grants of 40 million stocks under its 2014 and 2021 plans. The grant covers Rs 892.19 crore worth of Zomato stocks.

Bengaluru-based Swiggy had confidentially filed initial public offering (IPO) papers for Rs 10,400 crore (approximately $1.25 billion) and is likely to go public in a few weeks, according to sources.

American investment firm Invesco, which led Swiggy’s previous funding round, has marginally reduced the fair value of the food delivery giant as of April 30, compared to a quarter ago.

Swiggy raised $700 million in Invesco-led funding in January 2022, which made the Indian company a decacorn (a startup valued at over $10 billion) by doubling its valuation to $10.7 billion.

Earlier this year, Invesco marked up the valuation of IPO-bound Swiggy for the third consecutive time to $12.7 billion, a 19 per cent increase from what the company was valued at during its last fundraising, according to regulatory filings.

After facing a spate of valuation cuts early last year due to high cash burn and poor margins, Swiggy has been on a path of financial recovery as it gears up for over $1 billion initial public offering (IPO) this year. As such, its investors have been consecutively marking up Swiggy's valuation over the last year.

A fund managed by US-based asset management firm Baron Capital Group this year also increased the valuation of food delivery firm Swiggy to $15.1 billion. This is 25 per cent higher than the last fair value recorded by the investor, according to regulatory filings with the US Securities and Exchange Commission (SEC). The latest valuation reflects the value of Swiggy as of March 31. As of December 31, 2023, Baron Capital valued Swiggy at $12.1 billion. Baron had participated in the $700 million funding round of the firm in January 2022.