Swiggy Launches $65 Million ESOPs Liquidity Programme to Boost Employee Wealth Ahead of IPO

Food delivery platform Swiggy has introduced its fifth employee stock options (ESOPs) liquidity programme, worth $65 million. This initiative aims to reward employees and boost their wealth creation opportunities. It comes as Swiggy faces a challenging market and increasing competition, aiming to retain talent and foster employee loyalty.

Employee Rewards

“Rewarding employees by unlocking wealth-creation opportunities as Swiggy grows has always been a key priority for us,” said Girish Menon, Swiggy’s head of human resources, in a statement on Monday.

Around 2,000 employees across various levels and roles will have the chance to receive liquidity for their ESOPs.

Valuation and Transaction Details

The secondary transaction will take place at a discounted valuation of over $9 billion, attracting more investors as employees opt in, according to a source familiar with the matter.

In such transactions, shareholders sell their stakes to existing or new investors without bringing new capital into the company. These transactions are usually priced lower than primary shares.

In 2022, Swiggy raised $700 million in a funding round led by Invesco, achieving a valuation of over $10.7 billion and entering the decacorn club. Since then, Swiggy’s valuation has seen both increases and decreases, with Invesco revising its latest valuation to $12.7 billion in April this year. This revision precedes Swiggy’s expected $1.2 billion initial public offering (IPO) planned for the coming months.

ESOPs Liquidity Programme History

This latest ESOPs liquidity programme is Swiggy’s fifth since 2018 and its third consecutive since 2022. Altogether, these programmes have enabled over ₹1,000 crore of liquidity and benefited more than 3,200 employees. In 2021, Swiggy promised to reward its employees for their performance over the next two years as part of its ESOP liquidation exercise.

Last year, Swiggy repurchased shares worth $50 million from 2,000 employees. In 2022, it initiated a $23 million ESOPs liquidity programme. The company also conducted buybacks worth $4 million in 2018 and $9 million in 2020.

IPO Plans

In April this year, Swiggy filed its draft red herring prospectus (DRHP) for an IPO with the Securities and Exchange Board of India (SEBI) via the confidential filing route. It aims to raise about $450 million in fresh capital and another $800 million through an offer-for-sale component, as per the filing.

Challenges and Growth

Swiggy has faced significant challenges over the past few quarters, including a slowing market and increasingly price-conscious customers. These difficulties have been compounded by fierce competition, with other players striving to expand their user base, minimise cash burn, and achieve positive unit economics. Additionally, the company has seen senior-level management exits over the past year.

Despite these hurdles, Swiggy, founded in 2014 by Sriharsha Majety, Nandan Reddy, and Rahul Jaimini, continues to grow. Its operating revenues increased by about 45% to ₹8,264 crore in FY23, although losses widened by 15% to ₹4,179 crore from the previous year.

To date, Swiggy has raised over $3.5 billion from investors such as Prosus, SoftBank, GIC, and QIA, highlighting its significant backing and potential for future growth.