Ecommerce

Flipkart Explores Stake in Swiggy to Enter Quick-Commerce Market: Report

• ByStartupStory     |    June 26, 2024

In a bid to penetrate the quick-commerce market, Flipkart explored the possibility of acquiring a stake in Swiggy, one of India’s leading food delivery platforms, about eight to ten months ago. This information comes from a report by The Economic Times. However, the discussions between the two internet giants were unsuccessful due to disagreements over Swiggy’s valuation.

According to the report, Prosus, which owns a 33% stake in Swiggy, was part of the discussions and was reportedly looking to sell some of its shares. The proposed deal aimed for Flipkart to purchase a majority stake in Swiggy, but the negotiations fell apart over the value and the demand for a majority stake.

In April, after the talks ended, Swiggy filed a confidential application to go public. Reports from the same month indicated that Swiggy’s shareholders had approved a plan for a $1.25-billion public issue. This plan includes 450 million new shares and an $800-million sale by existing shareholders. The approval was granted during a special meeting held on April 23. Swiggy intends to raise up to Rs 3,750 crore through new shares and up to Rs 6,664 crore from the sale of existing shares.

Despite the reported discussions, Swiggy denied any talks with Flipkart. A Swiggy spokesperson stated, “No such conversation/negotiation/discussion has ever taken place.”

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 controlling the remaining share. Swiggy, backed by investors such as Prosus, Accel, SoftBank, and Invesco, was valued at $10.7 billion after raising $700 million in 2022. A report by Bernstein Research in March 2024 estimated the food delivery market to be worth $133 billion.

Swiggy’s quick-commerce service, Instamart, is facing stiff competition from Zomato’s Blinkit and Zepto. In response, Flipkart plans to launch its own quick-commerce service next month, with significant investment expected.

The report also suggested that Flipkart had discussions with Zepto about a potential deal, but these talks did not materialize. Recently, Zepto raised $665 million, doubling its valuation from 2023.

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