Amazon invests in Latin American delivery company Rappi to challenge local e-commerce giant MercadoLibre

According to Zhitong Finance APP, Amazon (AMZN.US) has invested in the Colombian delivery company Rappi. This strategic partnership combines the retail and technological infrastructure of the e-commerce giant with Latin America's most well-known "last mile" delivery company. This initial investment—according to a person familiar with the deal—consists of $25 million in convertible bonds, which is relatively small for Amazon. However, the deal allows the Seattle-based company to purchase up to 12% of Rappi's shares through warrants upon meeting certain milestone conditions, although these figures may vary. Access to Rappi's logistics network will help Amazon compete with regional e-commerce giant MercadoLibre (MELI.US). For Rappi, this partnership gains the endorsement of North America's largest online retailer and provides an opportunity to leverage its logistics and cloud computing network. In recent years, Amazon has adopted a practice of making direct investments in partners (including airlines, grocery distributors, and electronics manufacturers) through warrants. The aim is to gain more returns as Amazon's business growth drives improvements in partner performance. Founded in 2015, Rappi now operates from Mexico to Chile, with its "Turbo" service promising delivery of various items, from white wine to toothpaste, in under 10 minutes. The company also offers restaurant delivery services and has ventured into the financial sector, launching a digital wallet and obtaining regulatory approval in places like Colombia to offer credit card and savings account services. Rappi has received support from numerous well-known investors, including SoftBank Group, Sequoia Capital, and T. Rowe Price. Last year, Rappi's co-founder and CEO Simón Borrero stated that the company is expected to go public in 2025, potentially in New York. Last month, it was reported that Rappi secured a $100 million loan from Santander Bank and Kirkoswald Capital Partners. Amazon's investment in Rappi is based on the existing business relationship between the two. Rappi is a customer of Amazon Web Services. In Mexico, Amazon offers its Prime members a year of free delivery services through Rappi