Flipkart eyes more acquisitions, in talks with Swiggy, UrbanClap, UrbanLadder

Armed with over $4 billion in cash, India’s most valuable start-up Flipkart Ltd is planning more start-up investments and acquisitions as it seeks to widen its slender lead over Amazon India and diversify its business.

Flipkart has held talks to invest in food-delivery app Swiggy, services firm UrbanClap, furniture retailer UrbanLadder and some start-ups in insurance and wealth management, said three people familiar with the matter, speaking on condition of anonymity.

Mint had reported on 15 October that Flipkart was in talks to buy a large minority stake in Bookmyshow in a deal that may value the ticketing platform at $500-700 million.

The talks with the companies mentioned above haven’t yet materialized into deals.

Flipkart’s merger and acquisition (M&A) approach marks a shift from its strategy of 2014-15, when it sought to build a venture capital-like portfolio by investing prolifically. In those two years, Flipkart invested in or bought more than a dozen companies, including fashion retailer Myntra, trucking marketplace Blackbuck and advertising tech start-up AdIquity. Many of these were financial investments rather than deals that would boost the company’s business.


Now, Flipkart is only seeking large, strategic deals that will directly help its business, the three people cited above said, requesting anonymity.

Recent regulatory filings also confirm the shift in Flipkart’s approach towards mergers and acquisitions. According to filings with the corporate affairs ministry in September, Flipkart increased its reserves for financing acquisitions and significant investments to roughly Rs8,000 crore (over $1.2 billion) from earlier levels of Rs3,000 crore.

Flipkart didn’t respond to an email seeking comment. UrbanClap and Swiggy also did not respond to requests for comment. UrbanLadder said no deal with Flipkart is in the works currently.

This year, Flipkart has raised nearly $3 billion in fresh capital from SoftBank Group Corp., Tencent Holdings, eBay Inc. and Microsoft Corp. In August, Flipkart said it has more than $4 billion in cash.


Flipkart is India’s most acquisitive internet firm. Since starting out in 2007, it has bought or invested in over 20 companies. Its largest acquisition was that of Myntra for more than $330 million in May 2014. Earlier this year, Flipkart also tried to buy struggling smaller rival Snapdeal (Jasper Infotech Pvt. Ltd) for nearly $1 billion in stock but the deal collapsed in August because of differences over valuation and deal structure, among other things.

Flipkart is battling Amazon for supremacy in India’s $15 billion e-commerce market, which has seen a sharp slowdown in growth since the start of 2016.

Given this slowdown, Flipkart should seek deals to boost sales, analysts say. The company’s payments platform PhonePe is locked in a fight with another SoftBank-backed firm, Paytm, and Amazon Pay in the fast-growing consumer payments business.

Flipkart is also expanding into newer businesses. The company is working on offering insurance and wealth management products. To launch this business, it has considered buying a stake in fintech start-ups, the people cited above said.

“Flipkart’s new M&A approach is similar to what the large Chinese internet companies and ventures have done in China over much of the past decade—buy out smaller rivals and pick up strategic stakes in other large internet start-ups. Flipkart is trying to do two things—firstly, they are ensuring that they reach a size and scale from which they can’t be toppled by even deep-pocketed rivals such as Amazon. Secondly, they are essentially not missing the bus and protecting themselves from disruption,” said one of the people cited earlier.

(Courtesy : Livemint)

Amazon India plans to invest in online food delivery startup Swiggy

 Amazon India is considering an investment in online food delivery startup Swiggy and has held several rounds of discussions with the Bengaluru-based startup over the past three months, according to four people directly aware of the ongoing negotiations.
Swiggy has also attracted the attention of other strategic investors, including Alibaba -backed Chinese food delivery venture Ele.me, said the sources. "Everyone is talking since they are doing really well but it is not certain that a deal will be closed," said one of the people quoted above, who also confirmed that other Chinese investors have approached Swiggy seeking to invest in it.

Founded by BITS-Pilani alumnus Sriharsha Majety, the CEO, along with Rahul Jaimini and Nandan Reddy, Swiggy is regarded as one of the stronger players in a market which has seen several casualties.

It competes with Zomato and Rocket Internet's Foodpanda . At its last round of funding in August, the company was valued at an estimated $190-200 million (Rs 1,300-1,350 crore).

Several discussions with Amazon
While ET could not determine the exact contours of the transaction or the identity of the other potential investors, negotiations with Amazon have progressed the most.
Swiggy's executives have held at least three rounds of meetings with Amazon's India head Amit Agarwal, besides discussions with corporate development head Abhijeet Muzumdar.

According to people aware of Amazon's operating style, deals typically take 3-4 months to close. Amazon India and Swiggy declined to comment on what they described as "market speculation".

Ele.me did not reply to emailed questions. The Seattle-based Amazon has expressed interest in the strong consumer focus demonstrated by Swiggy, the sources said. However, it is also keen that Swiggy records gross profits before a deal is finalised.

Swiggy, which has raised about $72 million so far, is yet to achieve break-even. It counts Accel Partners, Norwest Venture Partners and Bessemer Venture Partners as main investors.

Experts are of the view that a deal with Swiggy can help Amazon expand the scope of its grocery delivery business, Amazon Now.

For the Bengaluru startup, a deal with the e-commerce giant can help improve utilization of its delivery personnel, of whom it employs about 4,000.

Synergies in hyper-local
"There are synergies in hyperlocal cross-utilization. Amazon will get a big food business and a hyper-local fleet on whose backbone they can grow aggressively in grocery as well," said an investor in the hyper-local market.

"For Swiggy, getting a high order density will lead to better utilization of the hyper-local fleet leading to a sustainable business. After food, the next logical expansion would be grocery and Amazon Now does grocery, so maybe that's the synergy."

In the past, Amazon has backed hyper-local services company Housejoy, besides buying stakes in companies such as gift cards player QwikCilver and online financial marketplace Bankbazaar in India.
Swiggy is currently focussing on expanding its restaurant base across cities and to break even at an operational level. Its core value proposition is its dedicated delivery fleet to fulfil orders and a zero minimum order.
However, the company has also indicated that in a bid to scale further, it will look at joint ventures with chefs and restaurants to expand the number of offerings. It is yet to scale that product.
Swiggy is fulfilling close to 40,000 orders per day. Online penetration within the takeout segment was only 2 per cent in India while it was 20-30 per cent in China, the UK and Canada, according to Morgan Stanley.

The investment bank estimates that the online food aggregation business can grow from almost nothing in 2014 to $4.4 billion in 2020.But while the opportunity in the space remains large, startups have been grappling with scale and hyper-competition, as they continue to lose money on every transaction, leading to some players shutting down and others changing their business model.

Courtesy : Techgig