Flipkart considered acquiring a stake in Swiggy approximately eight to ten months ago, as both companies aimed to ally in response to the growing quick commerce sector, as per a report by the Economic Times. However, the discussions reportedly ended due to a disagreement over valuations.

Once the talks failed, Swiggy submitted a confidential draft application for a public listing in April, the report added. Swiggy filed its draft IPO of USD 1.3 billion with the Securities and Exchange Board of India (SEBI).

The company reportedly aims to raise an additional USD 800 million through an offer-for-sale component and around USD 450 million in new financing.

Prosus, Swiggy's largest investor with a 33% stake, was also involved in the negotiations and was interested in selling part of its share, according to the report.

As per the Economic Times, a source said, “There was a discussion for a majority stake in Flipkart where Prosus and other investors would offload stakes, but besides valuation (mismatch), a majority stake (demand) was also a hurdle.”

However, Swiggy has denied this development. The company spokesperson reportedly said that no such conversation, discussion, or negotiation took place.

Meanwhile, the e-commerce platform Flipkart is planning to have its own quick commerce platform. By the second week of July, the company is planning to launch its own quick commerce version, ‘Flipkart Minutes’, as per a report by Business Standard. The company is planning to target a fifteen-minute delivery window.

Previously, Flipkart attempted to enter the quick commerce space with Flipkart Quick, where the delivery window was ninety minutes. However, it never took off. Flipkart also tried to have a deal with Zepto, but the talks failed.

The report also highlights that Flipkart is focusing on its grocery fulfilment centers for slotted deliveries. A new grocery store was also reportedly launched by the company in Rajasthan’s Jaipur.

Prosus, the Dutch-listed investment arm of South African conglomerate Naspers, has invested around USD 1 billion in the food and grocery delivery firm over the years. It has been trying to bring its holding in Swiggy to below 26% from the current 33%.

This also means Prosus will be tagged as a ‘promoter’ during Swiggy’s IPO because under Indian rules a shareholder with a stake of 26% or more is termed a promoter, which puts restrictions on the shares it could sell after the IPO.

Swiggy, in April, filed its draft IPO application with the market regulator Sebi confidentially. Before that, it secured shareholders’ approval for an INR 10,400 crore (USD 1.25 billion) public issue–which will include INR 3,750 crore (USD 450 million) of fresh shares and an offer for sale (OFS) of shares worth INR 6,664 crore (USD 800 million) by existing shareholders.

Swiggy's main competitor, Zomato, went public in 2021. As of the first half of 2023, Zomato held about 54% of the food delivery market by value, with Swiggy holding the rest. Swiggy is backed by investors like Prosus, Accel, SoftBank, and Invesco. It was valued at USD 10.7 billion after raising USD 700 million in 2022. A report by Bernstein Research in March 2024 estimated this market to be worth USD 133 billion.

Article Source – The Economic Times