Alibaba Joins Paytm To Pick Up $200 Mn Stake In Bigbasket

Chinese ecommerce giant Alibaba has joined forces with Paytm for discussions to pick up a stake in online grocery startup Bigbasket for $200 Mn.

Earlier this month it was reported that Paytm Mall was in talks with online grocery startup Bigbasket to invest $200 Mn for a substantial stake.

At that time it was reported that Paytm had also started due diligence of Bigbasket accounts and operations. An unnamed source said, “(Even) before the due diligence, Paytm (Mall) has offered $200 Mn to own a majority stake in Bigbasket. The final agreement will be made only after the due diligence process gets over.”

The proposed $200 Mn investment is offered at a valuation of nearly $900 Mn, post the investment.

Another source aware of the development said that Bigbasket was also in talks with Singapore’s sovereign wealth fund Temasek Holdings and China’s Fosun Group as well.

It is not clear at this time if Temasek will join the ongoing funding round with Alibaba and Paytm, or if it will be a direct investment at a later stage. On the other hand, reports suggest that Fosun’s venture capital arm Kinzon Capital, is in discussions with Bigbasket for a $20 Mn-$30 Mn co-investment with Alibaba and Paytm in the ongoing funding round.

In an interview with ET last week, Paytm founder Vijay Shekhar Sharma said that the company was gearing up to invest in an egrocer. This statement was in alignment with the company’s online-to-offline strategy.

Alibaba, along with its payments affiliate Alipay, owns more than a 50% stake in Paytm Mall. It has been doubling down on grocery and physical retail investments globally.

Bigbasket – A Snapshot

Bigbasket is touted to be the biggest online grocery player in the country. The platform claims to currently receive over 50,000 orders each day. Also, as per an official statement, the average monthly customer spend has grown from INR 500–INR 800 in December 2011 to INR 2,000+ in May 2017.

It was started by Fabmall founders VS Sudhakar, Hari Menon, VS Ramesh, Vipul Parekh, and Abhinay Choudhari in 2011. The company has to date raised about $305.8 Mn spread across six rounds. In March 2017, Bigbasket raised about $6.9 Mn (INR 45 Cr) venture debt from Trifecta Capital.

The company’s online grocery stores are present in more than 26 cities across India including Bengaluru, Hyderabad, Mumbai, Pune, Chennai, Delhi, etc.

According to a company statement, the online grocery store stocks over 20,000 products and 1,000 brands including fresh fruits and vegetables, packaged bread, bakery and dairy products, etc. The company claimed to have crossed the 5 Mn customers’ mark in May 2017.

This is not the first instance when acquisition reports about Bigbasket have surfaced. In April 2017, it was reported that Bigbasket and Gurugram-based hyperlocal grocery delivery startup Grofers were in talks for a potential merger. Last month too multiple reports surfaced regarding Amazon conducting preliminary talks with Bengaluru-based Bigbasket, for a possible acquisition.

Online Grocery Market In India

According to a Goldman Sachs report, “The domestic online retail industry is evolving into a hyperlocal, on-demand market. India’s ecommerce market is estimated to grow 15 times to $300 Bn by 2030.” The Indian online grocery market is estimated to reach $40 Mn (INR 270 Cr) by FY ’19 growing at a CAGR of 62% from 2016 to 2022.

The online grocery space is attracting major traction from ecommerce players like Paytm, Flipkart, and Amazon, etc.

Earlier this month, it was reported that Amazon had received the final nod from the government for its proposed $500 Mn investment in food retail in India. Earlier today, it was reported that ecommerce player Flipkart has launched a pilot of its grocery delivery service in Bengaluru.

In June 2017 it was reported that Tata Group was in talks to acquire Gurugram-based on-demand grocery delivery platform GrocerMax. As per reports, the conglomerate was looking to take over the existing management team as well as technology infrastructure of GrocerMax.

Other startups in the grocery segment, apart from Bigbasket and Amazon India include ZopNow, Satvacart, Godrej Nature’s Basket, DailyNinja, etc.

(The development was reported by ET)