Real issue with Swiggy’s IPO is actually the existing set of investors who might be desperate for 6 month lockin to get over!
Lets take the example of Zomato:
The ownership structure amongst Top 10 shareholders of Zomato didn’t change for 1 year as pre-IPO investors weren’t allowed to sell as per the regulatory lockin (tenure has been now reduced to 6 months). But the moment regulatory restriction got over, in span of next 24 months, 7 of top 10 shareholders completely exited as they continued to reduce their stake month after month.
In fact as per our calculations, Zomato has witnessed PE/VC funds selling of roughly 50% of its total equity capital in open market in the last 2 years, constantly adding to the free float. The names include Softbank, D1 Capital, Tiger Global, Sequoia, Tencent, Uber and many more!
Importantly, the day when the lock in had got over for Zomato’s pre-IPO investors, shares worth Rs 1,000+ crore were up for sale immediately and investment bankers were building a book for block deals at price as low as Rs 44/share which was significantly below IPO price of Rs 76/share.
Well, I am not saying Swiggy will have similar fate as a lot will also depend on the global macros post lockin gets over, but one must remember that global PE/VC investors are no way similar to promoters who continue holding in a big way – These funds have obligations to their own set of LPs and sooner or later with will have to exit from the stock – adding to the free float in a big way within short to medium term.
Read more on how Zomato’s shareholding pattern has evolved over years on: findingoutperformers [dot] com; Pic source: ET
| Subscribe To Our Free Newsletter |
