Swiggy Secures Rs 10,000 Crore to Boost Instamart Expansion

Swiggy, the Bengaluru-based food and grocery delivery platform, has successfully raised Rs 10,000 crore (approximately $1.2 billion) through a qualified institutional placement (QIP). The fundraising initiative, which concluded on Friday, was revealed in a regulatory filing submitted to the stock exchanges.

The company initiated the QIP on Tuesday, offering shares to prominent domestic mutual funds and international investors at a price of Rs 375 per share. This price reflects an 11% discount compared to Swiggy's closing stock price of Rs 416.70 on the Bombay Stock Exchange (BSE) as of Friday. Notably, the allotment price was nearly 4% below the floor price established by the company, which was set at ₹390.51. Swiggy had provisioned an option for a discount of up to 5% on this floor price.

According to reports, the majority of bids received were around Rs 375 per share. This latest capital injection comes at a time when competition in the quick commerce industry is intensifying. The funds raised will increase Swiggy's cash reserves to approximately Rs 15,000 crore. Additionally, the company anticipates generating another Rs 2,400 crore upon the completion of the sale of its stake in urban mobility startup Rapido.

Domestic investors dominated the QIP, with over 80% of subscriptions coming from local entities. Notable mutual funds such as ICICI Prudential, SBI Mutual Fund, and Aditya Birla Sun Life collectively acquired 37% of the issue, with ICICI Prudential being the largest participant, securing 16% of the placement.

Global investors that joined the QIP include Temasek, Norway’s sovereign wealth fund, Vanguard, Capital Group, Nomura, and Goldman Sachs. Swiggy has earmarked approximately ₹4,475 crore from these proceeds for the expansion of its quick commerce network, specifically targeting its Instamart unit.

Instamart is currently competing for market share against other quick delivery services, including the leading player Blinkit, as well as competitors like Zepto, which is backed by Nexus Venture Partners, and Tata Digital-supported BigBasket. Flipkart and Amazon also remain significant players in this rapidly evolving market. Zepto is expected to soon file for an initial public offering (IPO).

In the September quarter, Swiggy reported a consolidated cash burn of ₹740 crore, with a substantial portion attributed to Instamart. By September, the company had expended over 80% of the funds generated from its November 2024 IPO, primarily to cover the losses incurred in quick commerce operations. Swiggy's plans for the QIP were first disclosed by Economic Times on October 30, making this the company’s first fundraising effort since its IPO last year, which raised ₹4,500 crore.

As the quick commerce sector grapples with profitability challenges, concerns persist regarding public market appetite for financing further cash burn. Blinkit’s Chief Executive Officer, Albinder Dhindsa, expressed in a recent interview that the willingness of public markets to support cash-intensive operations in the quick commerce sector has become increasingly constrained. He highlighted that sustainable growth will soon be a critical issue for the industry.

In a further development, Amazon is also expanding its quick commerce offerings. Amit Agarwal, Senior Vice President for Emerging Markets at Amazon, noted that the company has observed strong demand in urban areas where its delivery service has been launched, intensifying competition against Blinkit, Swiggy's Instamart, and Zepto.

According to Bank of America Research, Blinkit holds a commanding market share of over 50% in the quick commerce space, with the remainder shared among Zepto, Instamart, BigBasket, Flipkart Minutes, and Amazon Now. Walmart-owned Flipkart, which has historically been Amazon’s largest e-commerce rival in India, is also aggressively entering the 10-minute delivery market, with plans to establish 800 dark stores by year-end.