Flipkart’s attempt to acquire majority stake in Zepto hits a roadblock: Report
Flipkart, which has been attempting a quick commerce venture for a while, might well not be able to do it via acquisition. According to a latest Economic Times report, Flipkart’s attempt at Zepto acquisition has fallen through, with talks not seeing any further review.
Quick commerce promises lightning-fast delivery of essential items and groceries, typically within minutes of an order being placed, with Zepto being one of the leaders in the Indian space. For Flipkart, the e-commerce leader owned by Walmart, the absence from the quick commerce arena has been conspicuous. Several reports have suggested that Flipkart engaged in talks with Zepto regarding a potential acquisition of a majority stake. The ecommerce giant expressed interest in acquiring Zepto at a valuation below $2 billion, with the founders retaining operational control. However, despite initial enthusiasm from both parties, the discussions ultimately reached an impasse, with little hope of revival. This comes months after its talks to acquire on-demand delivery platform Dunzo fell through.
Zepto has reportedly opted to pursue a financial round instead of a strategic sale. For its part, the quick-commerce upstart is currently engaged in discussions with private equity funds and existing investors to secure fresh funding, aiming for a valuation of nearly $2.5 billion, which will nearly double its previous valuation. Existing investors are expected to participate in the round, and prominent venture capital firms like Glade Brook Capital and Nexus Venture Partners are likely to remain committed.
Flipkart has been trying to establish a quick commerce presence for a while, and had initiated in-house ventures which ultimately shut down. It then attempted a Zepto acquisition, which now seems to have fallen through, largely due to valuation. A Goldman Sachs report recently suggested that Zepto surpassed $1Bn in annual sales, with other media reports suggesting a fresh fundraise for the company at $2.5Bn valuation.
“Zepto has indicated to potential investors that it may stretch the round size to around $500 million… Internal commitments from current brackets are for $200 million,” a person aware of the matter revealed. If Zepto successfully raises the funds, it could end up with a significant war chest to expand its geographical footprint, reaching new cities and establishing a wider delivery network. Additionally, the company could invest in improving its delivery infrastructure, potentially incorporating automation or optimizing logistics for faster deliveries. Furthermore, the funding could be directed towards developing in-house brands or forging strategic partnerships with existing consumer goods companies
