Swiggy’s LYNK exit: non-core asset cleanup, with a bet on Udaan’s IPO

Swiggy’s decision to sell its B2B retail distribution arm LYNK Logistics to Udaan for Rs 500 crore is less about a major strategic shift at the food-delivery company and more about cleaning up a non-core business while retaining exposure to the B2B commerce opportunity.

Under the transaction announced, Udaan’s parent Trustroot Internet will issue preference shares to Swiggy, giving the food-delivery company an approximately 2.8% stake in Udaan. Swiggy will also invest Rs 75 crore in Udaan for another 0.4%, taking its total holding to around 3.2%.

The deal values LYNK at Rs 500 crore. Swiggy had acquired the retail distribution platform in 2023, but the business remained peripheral to its core food-delivery and quick-commerce operations.

“It's a non-core asset, and they were not focusing much on that,” said Shobit Singhal, Associate Director, Equity Research at Anand Rathi Institutional Equities. For Swiggy, it’s not that material, he added.

According to Singhal, the transaction nevertheless gives Swiggy a potential avenue to create greater value from an asset it no longer wants to operate directly. Rather than receiving cash for LYNK, Swiggy is retaining exposure to Udaan, which is preparing for a potential public-market listing.

“If Udaan goes to IPO, actually they can generate a lot more value than what they were getting now,” Singhal said, adding that Swiggy could potentially monetise the Udaan stake at a later stage.

For Udaan, meanwhile, LYNK adds an established retail distribution network and relationships with FMCG brands. LYNK serves around 1 lakh retail stores, with Bengaluru, Hyderabad, Chennai and Kolkata together accounting for around 75% of its revenue. The acquisition is Udaan’s second major distribution acquisition after ShopKirana.

Udaan said the acquisition would strengthen its ability to connect consumer brands with a wider retailer network. The company has also recently completed a $160-million recapitalisation and has been positioning itself for sustainable profitability and eventual public-market readiness.

For Swiggy, the transaction is therefore less about exiting B2B commerce altogether and more about changing how it participates in the segment, from operating a distribution business to holding a minority stake in an established B2B platform.

The deal also allows Swiggy to unlock value from an asset that was not central to its current strategy, while giving it potential upside if Udaan’s IPO ambitions translate into a higher valuation.

The transaction is expected to close by October 22, subject to customary closing conditions and regulatory approvals.