Udaan Acquires ShopKirana in USD 88.5 Mn All-Stock Deal
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B2B e-commerce platform Udaan has made a significant move in the grocery commerce sector by acquiring Shopkirana in an all-stock deal. This marks a major consolidation in the industry, highlighting the ongoing shifts within the grocery e-commerce space.
As per regulatory filings, the deal has been approved by the board of Info Edge, which holds a 26.14% stake in Shopkirana through its wholly-owned subsidiary Startup Investments Holding Ltd (SIHL). The stake has been transferred to Hiveloop Technology Pvt Ltd (HEPL), a subsidiary of Trustroot Internet, Udaan's parent company based in Singapore.
In return for its stake, Info Edge will receive 1.68 crore shares of Hiveloop Technology, which translates to about 0.91% of HEPL on a fully diluted basis. These shares are linked to 73,561 reference shares of Udaan's parent company, valued at approximately USD 23.13 million. The swap suggests that Shopkirana's total enterprise value is around USD 88.5 million, based on the value of Info Edge's minority stake. However, the transaction remains subject to customary closing conditions outlined in the agreement.
Entrackr's analysis points out that Shopkirana will secure a 3.48% stake in Udaan's Indian business, based on Info Edge's holding in the Indian entity of Udaan. Founded in 2015, Shopkirana has received significant investments, raising over USD 50 million from investors such as Info Edge, Sixth Sense Ventures, and the Oman India Joint Investment Fund, among others.
Shopkirana has carved out a niche by focusing on the digitisation of procurement for kirana stores in smaller cities like Indore, Bhopal, Surat, and Agra. The integration with Udaan is expected to expand the latter's reach in fast-moving consumer goods (FMCG) and the hotel, restaurant, and catering (HoReCa) business.
In the fiscal year ending March 2024, Shopkirana's revenue fell by 6.26%, from INR 681.81 crore in FY23 to INR 639.16 crore in FY24. However, the company managed to reduce its losses by 30%, bringing them down to INR 55 crore in FY24. The results for FY25 are yet to be reported.
This acquisition signals the increasing investor fatigue and challenges within the grocery commerce space. Many firms have struggled to turn a profit, despite the large scale of the market. For Shopkirana, this move could be seen as an effort to position itself for acquisition by controlling costs, although this has affected topline growth. For Udaan, the stock swap offers a relatively low-risk acquisition as it continues its push to reduce EBITDA losses and hopes for future upside.
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