New Delhi, Sept. 7 -- Bengaluru-based eB2B platform Udaan has agreed to acquire Lynk Logistics, Swiggy's retail distribution business, in a deal that will give the foodtech company a minority stake in Udaan and in turn expand Udaan's distribution capabilities and brand relationships across key consumption markets.

The transaction values Lynk at Rs 500 crore (around $53 million) and will be settled through the issuance of preference equity shares to Swiggy in Trustroot Internet Pvt Ltd, the parent of Udaan.

Swiggy will receive an approximately 2.8% stake in Udaan as part of the deal and will separately invest Rs 75 crore in primary equity in the parent for an additional roughly 0.4% stake.

Udaan said that the transaction comes as it looks to improve its operating metrics and move towards sustainable profitability. It claimed that, over the 10 quarters from Q4 calendar year 2023 to Q1 calendar year 2026, its revenue grew at a CAGR of around 25%, while contribution margin expanded by nearly 500 basis points and EBITDA burn declined by about 70%.

The company said higher-margin businesses have also gained traction, with private labels now accounting for 15-25% of staples sales across its operating cities. Bengaluru, its largest operating market, has reached EBITDA profitability, according to the company.

The Lynk acquisition will add depth to Udaan's distribution network across several major markets. Bengaluru, Hyderabad, Chennai and Kolkata together account for around 75% of Lynk's revenue, giving Udaan a stronger presence across these markets, and adding Lynk's brand relationships and retailer network to its existing platform.

"We are firm believers in the large B2B opportunity that exists in India, and in Udaan's position as the category creator in this space. Bringing Lynk together with Udaan, the market leader, combines complementary capabilities with Udaan's scale and technology-led platform serving India's retail ecosystem," said Rahul Bothra, chief financial officer, Swiggy.

Udaan's fundraising, background

The transaction follows Udaan's $160-million recapitalisation, which comprised fresh equity, new debt and debt-to-equity conversion involving Lightspeed Venture Partners, M&G Investments and Moonstone Capital. The exercise also included about $45 million of private credit financing from a global investment management firm.

Founded in 2016, Udaan operates an eB2B platform across FMCG, staples and fruits and vegetables, connecting suppliers and brands with retailers. It also operates UdaanCapital, which provides financial products and services aimed at the working-capital needs of small businesses, manufacturers and retailers.

Published by HT Digital Content Services with permission from VC Circle.