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Zomato has approached the Competition Commission of India (CCI) to acquire 9.3 percent stake in e-grocery startup Grofers, revealed the order, a copy of which YourStory has seen.

As per the filing, Zomato will acquire 9.3 percent stake in Grofers’ subsidiary, Hands on Trade

(HoT) Pvt Ltd, along with certain rights in the collective company — Target (which includes Grofers India, HoT, and Grofers International).

HoT is engaged in the business of B2B wholesale trading with third-party merchants, contract manufacturing of food products, grocery, and other goods for the purpose of onward sale on a wholesale basis, and provides warehousing services, including storage of food products and grocery goods to third-party merchants, reads the official notification.

This acquisition is bound to strengthen Zomato’s position in the online grocery market. As part of the deal, Zomato and existing investor, Tiger Global, will reportedly invest around $120 million in the grocery startup, making Grofers a unicorn with a valuation above $1 billion.

The transaction has been notified under the green channel provision under Section 5(a) of the Competition Act, 2002. The green channel allows for an automatic system for speedy approval of certain categories of mergers and acquisitions. Such approvals can be availed where no complementary business activity between the combining parties or related parties exists.

While Zomato has already filed draft papers with the Securities and Exchange Board of India (SEBI) to raise about $1.1 billion through its IPO, SoftBank-backed Grofers was earlier reportedly looking to advance its plan to launch the initial public offering by the end of this year after its profitability path zoomed during the lockdown period.

More recently, Grofers announced that co-founder Saurabh Kumar will be stepping down from his operational roles at the company and will only remain as a shareholder and board member. In a blog post, Albinder Dhindsa, Founder and CEO, Grofers, said,

“Over the last six months SK (Saurabh Kumar) had been yearning to invest in his own personal evolution — to grow beyond a growth driver to become a designer, enabler, and coach. And diving deeper has convinced him that this is another area he can have a huge impact on if he can build on it from scratch.”

Saurabh, along with Albinder, co-founded Grofers in 2013.