E-commerce major Amazon India has reportedly approached food delivery major Swiggy for a potential deal regarding Instamart, the latter’s quick commerce business.
In April, the Bengaluru-based startup filed its draft red herring prospectus (DRHP) with the regulator Securities and Exchange Board of India (SEBI). The IPO could include a fresh issue of shares worth Rs 3,750.1 crore and an offer for sale (OFS) component worth Rs 6,664 crore, together taking the aimed IPO to Rs 10,000 crore.
As of yet, no official actions have taken place but sources suggest that Amazon either intends to pick up a stake in the ongoing pre-IPO placement or a buyout proposal for Swiggy Instamart. The e-commerce company will have to be quick with decisions as the nature of the deal looks complicated. Earlier, Flipkart was also seeking a similar deal with Swiggy which couldn’t be commenced.
The source further added, “Buying the entire company will be too expensive at a valuation of $10-12 Bn. Also, Amazon is not typically known to pick up minority stakes.”
The e-commerce giant’s interest in the quick commerce platform is due to the rapid development of the sector in the country. The quick commerce market is set to be worth $6 billion by the next year as per the global brokerages. Same-day deliveries for Amazon’s Prime members have also doubled on account of the investments backing it.
Amazon India will require to pilot a separate vertical in order to achieve the deal as the company doesn’t offer the service in any of the other markets globally. Additionally, Swiggy is not keen to sell only the quick commerce business while Amazon has no intentions to get in the food delivery sector that has shown flat growth of late.
