New Delhi: US-based asset management company, Baron Capital, has recently marked down the fair value of Swiggy, a leading foodtech platform in India. This markdown follows similar actions taken by Invesco, which has reduced Swiggy’s valuation twice in the past four months, bringing it down to $5.5 billion as of January this year.
According to filings with the Securities and Exchange Commission (SEC), Baron Capital estimated the fair value of its stake in Swiggy at $50.9 million as of December 31, 2022. The company holds approximately 0.7 percent stake in Swiggy, implying a valuation of $7.3 billion for the foodtech unicorn.
Baron Capital made its investment in Swiggy in January of the previous year, acquiring 11,578 shares of the foodtech platform for $76.8 million. Swiggy, however, declined to comment on the matter.
It is worth noting that Baron’s fair value estimate for Swiggy is slightly higher than the market capitalization of its biggest competitor, Zomato. As of May 15, Zomato’s market capitalization stood at a little over Rs 53,000 crore, or approximately $6.6 billion, considering the exchange rate of one US dollar to be Rs 81. On December 31, Zomato had a valuation of $6.3 billion.
Baron Capital is now among a growing list of US-based asset management companies that have reduced the fair values of Indian startups due to declining valuations of technology companies globally. In addition to Invesco and Baron Capital, Vanguard has cut the valuation of the ride-hailing platform Ola to $4.8 billion, as reported by Moneycontrol. Blackrock, one of the world’s largest asset management companies, has also halved the fair value of Byju’s, the world’s most-valued edtech firm. Other startups such as Pharmeasy and Pine Labs have also experienced markdowns in their fair values.
Swiggy’s valuation has been a topic of discussion for several months. In March, Invesco initially lowered Swiggy’s fair value to $8 billion and subsequently reduced it further to $5.5 billion. With Baron Capital joining the list, there are concerns regarding the foodtech company’s valuation in the private market, particularly as its last funding round reached a staggering $10.7 billion valuation.
Traditionally, private market valuations tend to follow public market valuations, which appears to be the case with Swiggy. Zomato, at its peak, had a market capitalization exceeding $15.5 billion, which has since decreased by more than half since the beginning of 2022. Over the past year, investors seem to have estimated Swiggy’s valuation at around $6 billion, considering Zomato’s valuation ranging between $4-7 billion, as observed by industry experts.
Founded in 2014, Swiggy initially started as a food delivery platform and later expanded its services to include grocery delivery and hyperlocal delivery. Lately, the company has been heavily focusing on grocery delivery, also known as quick commerce. Like many startups, Swiggy has significantly reduced costs since the start of 2022 to extend its financial runway. On May 15, Moneycontrol reported that Swiggy managed to cut its monthly burn rate from $45-50 million to $20 million.
