Investors are putting higher valuations on food delivery platform Swiggy as the Sriharsha Majety-led start-up prepares to dish out an initial public offering later this year.

US asset management firm Invesco has marked up Swiggy’s valuation by 18 per cent to $12.7 billion.

Invesco had valued Swiggy at $10.7 billion when it led a $700-million funding round in January 2022.

The US asset management firm led a $700 million funding round of Swiggy in January 2022. After a series of cuts, it bumped up the valuation of the start-up to $8.3 billion in October 2023.

Invesco was not the sole investor to ramp up Swiggy’s valuation: Baron Capital Group, a US-based asset manager, raised its valuation to $12.1 billion on March 8, 2024, which is a 13 per cent increase from its previous valuation of $10.7 billion in 2022.

Baron Capital had also invested in Swiggy during the funding round in January 2022

The food delivery and restaurant aggregator is planning to come up with a $1-billion IPO this year. The share float will reportedly include an offer-for-sale (OFS) of around $600 million by the existing investors, which will offload some of their stake.

In the runup to the listing, Swiggy has also reportedly converted into a public limited company from a private limited entity. Its name has also reportedly changed to Swiggy Limited from Swiggy Private Limited.

During 2022-23, Swiggy’s revenue from operations had risen about 45 per cent to Rs 8,264.6 crore against Rs 5,705 crore in the previous fiscal. Its losses also increased to Rs 4,179 crore during the year, against Rs 3,628 crore in 2021-22.

Swiggy’s key rival Zomato has seen its stock price rise to Rs 193.70 from a 52-week low of Rs 51.80 in April 2023. Zomato reported a net profit of Rs 138 crore in Q3 compared with a net loss of Rs 347 crore a year ago.

In a February note, analysts at Bernstein had said that the food delivery segment in India is vastly underpenetrated at around 7 per cent. While the penetration in Korea is close to 65 per cent, it stands at 23 per cent in the US, 24 per cent in China and Singapore.

The brokerage added that Zomato has more than 60 per cent share in new downloads compared with 40 per cent of Swiggy.

Zomato’s decision to fan out to smaller cities has enabled it to add new users faster than Swiggy.

“Post Covid, Zomato has grown faster than Swiggy — both from a user base and gross merchandise value (GMV) perspective driven by strong execution, wider penetration and stronger content funnel,’’ it said.

The report said that from a GMV perspective, Zomato holds around 54 per cent share in food delivery compared with Swiggy at 46 per cent over the six months of January to June last year.