Brief: Indian e-grocer Grofers said to seek SPAC deal after stalled acquisition talks

• Grofers is considering a merger with a special purpose acquisition company (SPAC) that would allow it to ‘indirectly’ list on one of the US public markets, Bloomberg reports.
• The Indian online grocer has appointed an adviser to assist with exploring SPAC merger options, but talks are still at an early stage, according to people familiar with the matter.
• Gurgaon-based Grofers is reportedly seeking a SPAC deal that would value it at around $1 billion after negotiations for a potential sale to meal delivery app Zomato or e-commerce firm Paytm Mall hit a dead end.

Why it matters:

SPACs are in vogue, with 219 of the ‘blank check’ companies raising $73 billion in 2020 – a 462% year-on-year increase that beat the $67 billion raised by ‘traditional’ IPOs last year, according to Goldman Sachs.

The vehicles provide a route for privately held businesses — including tech startups — to quickly access the public markets by merging with already-listed SPACs, rather than going through the full IPO process on their own.

In the agrifoodtech space, US indoor farming company AppHarvest completed a $475 million merger with SPAC Novus Capital earlier this month to list on New York’s NASDAQ.

Grofers saw its annual revenue more than double to hit ₹17.7 billion ($244 million) in FY 2019-20, though its net loss widened 42% to over ₹63.7 billion ($877 million) over the same period.

The company is backed by investors including SoftBank, Tiger Global, and Sequoia Capital. SoftBank has set up at least three SPACs since December, potentially with a view to taking some of its portfolio companies public.