Food delivery giant Swiggy has announced the sale of its B2B retail distribution subsidiary, LYNK Logistics, to business-to-business e-commerce platform Udaan. The transaction, valued at ₹500 crore, sees Swiggy shedding a non-core asset while strategically securing a significant stake in Udaan ahead of its anticipated public listing.
Strategic Asset Cleanup and Equity Bet
Under the terms of the deal, Udaan's parent company, Trustroot Internet, will issue preference shares to Swiggy. This will grant Swiggy an initial 2.8% stake in Udaan. Additionally, Swiggy will invest an extra ₹75 crore, increasing its total holding to approximately 3.2%. This structure allows Swiggy to exit direct operations in B2B distribution while maintaining exposure to the broader B2B commerce sector through its equity in Udaan.
Acquired by Swiggy in 2023, LYNK Logistics remained peripheral to the company's primary focus on food delivery and quick commerce. Analysts view this divestment as a prudent cleanup of non-core business operations. Shobit Singhal, Associate Director, Equity Research at Anand Rathi Institutional Equities, noted,
"It's a non-core asset, and they were not focusing much on that. For Swiggy, it's not that material."
Potential Upside from Udaan's IPO
Rather than receiving a cash payout for LYNK, Swiggy's decision to take an equity stake in Udaan is a calculated move to potentially unlock greater value. Udaan is actively preparing for a public market listing, and Swiggy's 3.2% holding could appreciate significantly if the IPO materializes at a higher valuation. Singhal added, "If Udaan goes to IPO, actually they can generate a lot more value than what they were getting now."
Udaan Strengthens Distribution Network
For Udaan, the acquisition of LYNK brings an established retail distribution network and strengthens its relationships with fast-moving consumer goods (FMCG) brands. LYNK currently serves approximately 1 lakh retail stores, with a significant portion of its revenue concentrated in major Indian cities like Bengaluru, Hyderabad, Chennai, and Kolkata. This move follows Udaan's previous distribution acquisition of ShopKirana, further bolstering its ability to connect consumer brands with a wider retailer base.
Udaan recently completed a $160 million recapitalization round and has been actively positioning itself for sustainable profitability and eventual readiness for public markets. The LYNK acquisition is expected to further support these strategic objectives. The transaction is projected to conclude by October 22, subject to customary closing conditions and regulatory approvals.