SUMMARY
If the proposed acquisition gets the CCI nod, the Tata group will pick up stakes in B2B and B2C entities operated by BigBasket
The exact value of the transaction has not been disclosed, but market estimates peg it at $1.8-2 Bn
The acquisition will allow the Tata group to boost its yet-to-be-launched super-app that will feature a wide range of consumer services on a single platform
The Tata group, on Friday, applied for the Competition Commission of India’s (CCI’s) approval to acquire a majority stake of 64.3% in online grocery retailer BigBasket, regulatory filings revealed. The acquisition will enable the Indian multinational to boost its yet-to-be-launched super-app as it plans to bring all its consumer offerings onto a single platform.
The exact value of the transaction has not been disclosed yet, but market estimates peg it at $1.8-2 Bn. It also means most of BigBasket’s existing investors, including China-based ecommerce platform Alibaba, will be exiting the company. According to earlier reports, the Tata group is expected to buy out Alibaba’s 30% stake in the e-grocery company.
The proposed transaction will also see the Tata group pick up stakes in the B2B and B2C arms of BigBasket, run by Supermarket Grocery Supplies (SGS) and Innovative Retail Concepts, respectively, filings with the CCI showed.
The CCI also held that the proposed deal “will not lead to any change in the competitive landscape or cause any appreciable adverse effect on competition in India, irrespective of the manner in which the relevant markets are defined”.
BigBasket’s top management, including the cofounder and CEO Hari Menon and others, are likely to stay on board. The terms of the deal with the Tata group will also allow the company to list on public markets as early as 2022, according to unnamed sources quoted by a news report.
BigBasket was launched in 2011 by V.S. Sudhakar, Hari Menon, Vipul Parekh, V.S. Ramesh and Abhinay Choudhari. It entered the coveted unicorn club in May 2019, after raising $150 Mn in Series F from Alibaba, South Korea’s Mirae Asset Global Investments and the UK government-backed CDC Group.
Prior to the Tata deal, the company was looking to raise $200-300 Mn from new and existing investors at a valuation of $1.5-2 Bn, CEO Menon had confirmed. BigBasket was reportedly in talks with Singapore-based Temasek, hedge fund Tybourne Capital and former US vice-president Al Gore’s Generation Investment Management before the Tata group came up with the acquisition plan.
The proposed super-app will pit the Tata group against digital business conglomerates like Reliance Industries, Amazon and Walmart-owned Flipkart. Over the past year, all of them have set their eyes on becoming a digital monopoly by getting into various segments such as grocery, medicine, consumer services and more. While the Tata group is looking to acquire BigBasket to enter the grocery segment, it is also planning to buy a majority stake in the e-pharmacy startup 1mg for a deep dive into the online medicine business.
The Tata group’s super-app (still in the works) will help consumers avail of a wide range of services, including the online purchase of food and grocery, fashion and lifestyle products, consumer electronics and consumer durables besides offering insurance, payments and other financial services, education and healthcare.
