Amazon in talks to buy IPO-bound Swiggy's Instamart: Report

Food delivery company Swiggy has been approached by e-commerce giant Amazon showing its interest for a potential deal with Instamart.

This comes after Swiggy filed a confidential draft document along with Sebi for public offering of Rs 10,414 crore, according to a report by The Economic Times.

"Amazon has swooped in with interest to either pick up a stake in the ongoing pre-IPO placement or a buyout proposal for Instamart… but there are multiple roadblocks at the moment," the publication's report cited a person who knows about the matter as saying.

Sources have told the publication that although no official offer has been made yet, Amazon headquarters in Seattle might have to act quickly to reach the next stage of talks.

According to the report, the man cited above said, "Swiggy is unlikely to sell only its quick commerce business and Amazon won’t be interested in the food delivery space where growth is starting to plateau."

"Buying the entire company will be too expensive at a valuation of $10-12 billion. Also, Amazon is not typically known to pick up minority stakes."

It is likely that Bengaluru-based Swiggy would price itself at a discount compared to its business rival Zomato, whose market cap was at Rs 1.9 lakh crore according to the closing BSE markets on Friday (July 19).

However, the publication said citing a Goldman Sachs April report, that the value of commerce units Blinkit and Zomato is at Rs 1,08,741 crore, according to the publication's report.

Amazon's Indian team has been looking for months into the initiative for its own quick commerce business in the country, leading to its interests in Swiggy's Instamart.

Since Amazon doesn't provide delivery services services in any global markets as of now, it will need the global nod in case it launches its own separate vertical of the same.

According to the ET report, Swiggy, on the other hand, has been getting rid of its secondary stakes at a valuation of around Rs 75,285 crore in the private market to shrink the shareholding of its oldest stockholder Prosus, which own about a 33 per cent stake.

The food delivery company has also provided Esop buyback (liquidity for its employees) for about Rs 543 crore.

According to the publication's report, Flipkart had tried a similiar deal with Swiggy, but nothing was announced due to valuation mismatch between the two.

For the sale of its secondary stakes, Swiggy had approached companies including WhiteOak, Motilal Oswal, Orhcid Asia, Malabar, Enam Group and some other individuals with high networth.