Swiggy Shareholders Cap Foreign Ownership At 49.5%
More than 99.9% of Swiggy's shareholders voted in favour of the proposal, allowing the company to achieve Indian-owned and controlled company status and operate Instamart under an inventory model, potentially leading to $400 million in outflows from MSCI and FTSE indices
Swiggy's shareholders have voted to cap foreign ownership at 49.5%, allowing the company to achieve Indian-owned and controlled company (IOCC) status. This decision was made with more than 99.9% of shareholders voting in favour of the proposal.
The cap on foreign ownership will enable Swiggy to operate its quick-commerce business Instamart under an inventory model. Previously, Instamart served as a marketplace that hosted seller entities, but it can now adopt an inventory-led model and sell products after directly procuring them from brands.
Swiggy had earlier sought to achieve IOCC status in May this year, but only around 72% of shareholders voted in favour of the proposal. This time, the company's domestic ownership stood at 50.5% as of early August, and foreign ownership was 49.5%, effectively near the proposed cap.
The company's financial performance has been improving, with company-wide revenue up 37% in Q1 FY27. However, Instamart posted a net loss of ₹651 Cr in Q1 FY27, and Swiggy's company-wide net loss was ₹791 Cr, a 34% decrease year-over-year.
## Why it matters The decision to cap foreign ownership at 49.5% may lead to $400 million in outflows from MSCI and FTSE indices. This is because if the foreign portfolio investor (FPI) holding is within 3 percentage points of the maximum permissible limit, the stock comes under the red-flag list. If the FPI limit is breached, the foreign investor shall divest their excess holdings within five trading days from the date of settlement of trades, by selling shares only to domestic investors.
Once the resulting dip in foreign ownership is updated with the depositories, benchmarks will likely exclude the stock within 2-3 business days. This could result in passive outflows of over $400 million from MSCI and FTSE indices.
The IOCC status will allow Swiggy to operate its business with more flexibility, particularly with regards to its quick-commerce arm Instamart. The company has indicated that operational groundwork is underway, enabling a seamless migration once all necessary approvals and implementation steps are completed.
## What happens next Swiggy will now approach the Reserve Bank of India to seek approval for a ceiling on its foreign ownership. The company's shareholders have given their nod to the proposal, and the next step is to obtain the necessary approvals from the regulatory authorities. With the IOCC status, Swiggy can expect to operate its business with more freedom, particularly with regards to its inventory-led model for Instamart.
