🛒 Amazon's Interest in Instamart
Amazon India has approached Swiggy for a stake in its quick commerce business, Instamart. This comes as Amazon is working on its own quick commerce initiative. According to The Economic Times, the e-commerce giant is interested in either a pre-IPO stake or a buyout of Instamart. However, no official offer has been made yet, and there are several roadblocks to the potential deal.
📈 Swiggy's IPO Plans
Swiggy is preparing for a $1.3B IPO, having confidentially filed draft documents with SEBI. They aim to reduce Prosus’s stake from 33% to less than 26% before the IPO. This reduction would prevent Prosus from being classified as a promoter. Swiggy is not keen on selling only its quick commerce business, adding to the complexity of Amazon's potential investment.
💰 Valuation and Roadblocks
The valuation of Swiggy at $10-12B makes a full buyout expensive. Amazon, known for avoiding minority stakes, faces challenges in structuring a feasible deal. Additionally, Amazon needs global clearance and a separate vertical for its quick commerce services, which are not offered in any of its markets globally.
📊 Strategic Considerations
Amazon’s interest in Instamart is part of its strategy to enter the quick commerce market. Swiggy’s quick commerce business is growing, while its food delivery segment is seeing slower growth. Early discussions are ongoing, but the complicated deal structure may prevent a transaction. As Amazon explores this opportunity, it highlights its commitment to expanding its service offerings in India.
Do you think Amazon will succeed in acquiring Instamart?
