Amazon India has reached out to Swiggy, which is preparing for an IPO, about a possible partnership including its Instamart rapid commerce division. This event occured just after Swiggy, one of the largest online companies of the modern era, filed draft paperwork in confidence with Sebi for an initial public offering (IPO) of Rs 10,414 crore ($1.25 billion).

One of the individuals mentioned above stated, "Amazon has jumped 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."

There is currently no formal offer on the table, and insiders claimed that in order for negotiations to go to the next level, Amazon headquarters in Seattle must act quickly.

According to these experts, the early talks might not result in a transaction because of the deal's complex current structure. According to the aforementioned source, "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."

"At a valuation of $10–12 billion, purchasing the entire business will be prohibitively costly. Furthermore, minority share purchases by Amazon are not customarily made," the source stated.

According to an Amazon India representative, the corporation doesn't address rumors and conjecture. Questions were not answered by Swiggy.

Based out of Bengaluru, Swiggy is probably going to price itself far lower than its fiercest rival Zomato, which closed on Friday with a market valuation of Rs 1.9 lakh crore on the BSE. The fast commerce verticals like Swiggy and Zomato are not given a different worth. But in April, a Goldman Sachs research estimated Blinkit, Zomato's rapid commerce division, to be worth $13 billion.

According to those familiar with the discussions, Amazon's interest in Swiggy Instamart coincides with the US retailer's India team's months-long development on its own rapid commerce program. However, they stated that as Amazon does not provide speedy delivery in any of its markets worldwide, it will need global authorization to create a new sector.

With a $9 billion value, Swiggy has been selling off secondary ownership on the private market in an effort to minimize the amount of shares held by Prosus, one of its oldest investors. The Dutch-South African tech investor now holds a 33% interest, but it is working to reduce it to less than 26% so that when Swiggy listings, it won't be considered a promoter. Additionally, last week, the meal delivery business revealed a $65 million Esop repurchase to provide liquidity to its staff.

According to a report from June 25, Flipkart attempted a similar agreement with Swiggy the previous year, but the negotiations broke down over a disparity in valuation. On April 19, ET also revealed that Flipkart was in talks with Zepto to acquire the latter, but the fast-growing e-commerce company ended up raising $665 million in capital, valuing the company at $3.6 billion following the investment.

Swiggy's advisers have reached out to a number of domestic family offices, high net worth individuals (HNIs), and investment companies, such as 360One, WhiteOak, Malabar, Motilal Oswal, InCred Wealth, Orchid Asia, and Enam Group, for the secondary share sale during the last several weeks.