Flipkart Held Talks With Swiggy For Stake Purchase, Says Report

SUMMARY

The talks fizzled out as the two segment giants failed to come to consensus over the valuation and Flipkart’s bid to acquire majority stake, a report by ET said

Swiggy’s investor Prosus was also part of the negotiations and was “keen” on divesting some of its stake in the foodtech major, as per the report

A Swiggy spokesperson told the publication that no such conversation or negotiation ever took place

Ecommerce major Flipkart reportedly held talks with Swiggy for a potential stake purchase in the foodtech major eight to ten months ago.

The talks fizzled out as the two segment giants failed to come to consensus over the valuation, Economic Times reported citing sources. Flipkart is also said to have demanded a majority stake in the foodtech major, which proved to be a roadblock to the deal.

The report claimed that Dutch investor and Swiggy’s largest backer Prosus was also part of the negotiations and was “keen” on divesting some of its stake in the foodtech major.

“There was a discussion for (a) majority stake for Flipkart where Prosus and other investors would offload stake. But besides valuation (mismatch), a majority stake (demand) was also a hurdle,” the report quoted one of the sources as saying.

Swiggy was valued at about $11 Bn to $12 Bn at the time of the deliberations.

Another source told the publication, “The talks were centred around the Prosus block and if others too can join and make a big enough chunk, as Flipkart was not interested in a minority stake”.

The report said that the discussions were verbal and there was no formal binding or non-binding offer on paper. As per the report, Swiggy, post the failed talks, filed its IPO papers via the confidential route in April 2024 to list on the bourses.

Inc42 has reached out to Swiggy for a comment on the story. The story will be updated on receiving a response. Flipkart declined to comment on the matter.

Meanwhile, a spokesperson for Swiggy denied the development to ET and said, “No such conversation/negotiation/discussion has ever taken place”.

The deal, if successful, would have paved the way for Flipkart’s entry into India’s burgeoning food delivery and quick commerce segments. Earlier, it was reported that Flipkart also held talks with quick commerce startup Zepto to acquire a stake, but the deliberations failed after the ecommerce major sought a significant stake in the startup.

The developments come at a time when the competition has intensified in India’s quick commerce space. Last week, Zepto raised $665 Mn funding, while other major players such as Zomato-owned Blinkit and Swiggy Instamart have also rapidly scaled up their operations.

For now, Flipkart is preparing for its foray in the quick commerce segment. However, a stake in Swiggy would have also helped it leverage synergies with the IPO-bound company to make strategic gains in the Indian foodtech arena. It would have also given Prosus a partial exit.

Meanwhile, Swiggy is gearing up for its public listing. Earlier this year, the company received board approval for a INR 10,400 Cr ($1.25 Bn) public issue, comprising a fresh issue of shares worth INR 3,750 Cr ($450 Mn) and an offer for sale (OFS) component of INR 6,664 Cr ($800 Mn).

In preparation for this, Swiggy aggressively cut costs, streamlined operations and scaled up revenues. Just a day ago, Prosus, in its 2024 annual report, said that Swiggy posted a 24% year-on-year (YoY) jump in its revenue in the calendar year 2023, excluding mergers and acquisitions, largely on the back of a 26% YoY increase in gross order value (GOV).

Earlier this year, Inc42 reported that Swiggy was set to clock about INR 10K Cr in revenue in FY24, fueled by the rise in its Instamart orders and platform fees related to food delivery.