Amazon India in talks for deal with Instamart amid Swiggy's IPO filing

Bengaluru-based Swiggy recently filed with the Securities and Exchange Board of India (Sebi) for a Rs 10,414 crore IPO, one of the largest planned by a new-age internet company

Amazon India is in talks with Swiggy about a potential deal with its Instamart quick commerce division, according to a report by The Economic Times.

This development follows Bengaluru-based Swiggy’s recent filing with the Securities and Exchange Board of India (Sebi) for a Rs 10,414 crore IPO, one of the largest planned by a new-age internet company.
 

The report quoted a source as saying, “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 sources added that there is currently no formal offer, and for discussions to advance, Amazon’s Seattle headquarters must act quickly. The report quoted sources as saying that the initial talks might not result in a deal due to the current complexity of the arrangement.

 

“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,” the source said, as cited by The Economic Times.

Swiggy is expected to set its price significantly lower than its main competitor, Zomato, which had a market capitalisation of Rs 1.9 trillion, as of Friday’s close on the BSE.

While there is no distinct valuation for the quick commerce segments of either Swiggy or Zomato, a Goldman Sachs report from April estimated Blinkit, Zomato’s quick commerce division, to be worth $13 billion, the report said.

Amazon’s interest in Swiggy Instamart aligns with its India team’s ongoing efforts to develop its own quick commerce service. Sources familiar with the discussions indicated that establishing a separate quick delivery vertical would require international approval, as Amazon does not currently offer this service in any other market worldwide, the report further said.

Swiggy has been selling secondary stakes in the private market, currently valued at around $9 billion, to decrease the shareholding of its long-time investor, Prosus. The South African-Dutch tech firm, which holds a 33 per cent stake, aims to reduce its ownership below 26 per cent to avoid being classified as a promoter once Swiggy goes public. Additionally, Swiggy recently revealed a $65 million buyback of employee stock options, providing liquidity to its staff, the report said.