Swiggy , India's leading food delivery and quick commerce platform, has announced a significant restructuring of its quick commerce segment. The company's board has approved the sale and transfer of its Instamart business to a wholly-owned subsidiary, Swiggy Instamart Private Limited.

Key Details of the Transfer

The transfer, which is subject to shareholder approval, involves the sale of Swiggy's quick commerce business operating under the brand name 'Instamart'. This includes all relevant assets, liabilities, permits, licenses, records, intellectual property, employees, and contracts associated with the Instamart undertaking.

Financial Implications

According to the company's disclosure:

• Instamart's revenue stood at INR 21,295.84 crore, representing 24.21% of Swiggy's standalone revenue.
• The net worth of the Instamart undertaking was negative INR 2,976.66 crore, accounting for -2.48% of Swiggy's standalone net worth.

Transaction Structure and Timeline

The transfer will be executed as a slump sale, with Swiggy receiving a lump sum cash consideration based on the book value of Instamart's assets and liabilities at the time of transfer. The effective date for the transfer is expected to be after the third quarter, subject to board determination.

Strategic Rationale

Swiggy stated that this restructuring aims to develop "a focused, efficient, and strategically aligned corporate entity for the long-term development and performance of the Instamart business." The move is expected to provide enhanced flexibility in resource deployment for the quick commerce segment.

Regulatory Compliance

The transaction is classified as a related party transaction, as the buyer, Swiggy Instamart Private Limited, is an indirect step-down wholly-owned subsidiary of Swiggy. The company has assured that the transfer will be conducted at arm's length, based on the book value of the Instamart undertaking.

Conclusion

This strategic move by Swiggy underscores the growing importance of the quick commerce sector in India's evolving e-commerce landscape. By creating a separate entity for Instamart, Swiggy appears to be positioning itself for more focused growth and potentially easier access to capital for its quick commerce operations.

In a significant development in the Indian mobility sector, Prosus, a global consumer internet group, is reportedly planning to acquire a substantial portion of Swiggy 's stake in the ride-hailing company Rapido. This potential deal could have far-reaching implications for the mobility landscape in India.

Potential Valuation Boost for Rapido

The proposed transaction could value Rapido at up to $2.70 billion, marking a notable milestone for the ride-hailing platform. This valuation underscores the growing interest and potential in India's mobility sector, particularly in the bike-taxi and auto-rickshaw segments where Rapido has established a strong presence.

Strategic Move by Prosus

Prosus, known for its investments in technology companies worldwide, appears to be strengthening its position in the Indian market through this potential acquisition. By taking over a significant portion of Swiggy's existing investment in Rapido, Prosus could gain a foothold in India's rapidly evolving urban mobility space.

Implications for Swiggy

For Swiggy, primarily known for its food delivery services, this move could represent a strategic shift in its investment portfolio. While the exact reasons for Swiggy's potential divestment are not specified, it could be part of a broader strategy to focus on its core business operations.

Market Dynamics

This development highlights the dynamic nature of India's startup ecosystem, where strategic investments and acquisitions play a crucial role in shaping market landscapes. The mobility sector, in particular, has seen significant interest from both domestic and international investors.

As the deal is still in the planning stages, stakeholders and market observers will be keenly watching for further developments. The potential transaction could have ripple effects across the ride-hailing industry and may influence future investments in the sector.

While specific details of the stake size and exact valuation are yet to be confirmed, this move by Prosus signals continued interest in India's tech-driven mobility solutions. As urban transportation continues to evolve, such strategic investments could play a pivotal role in shaping the future of mobility in India's bustling cities.