Tata Group Could Pay $700 Mn For BigBasket Deal As It Solidifies Super App Plans

Tata Group is looking to acquire a majority stake in online groceries unicorn BigBasket to catch up with other conglomerates like Reliance, Flipkart and Amazon. This partnership with BigBasket could help Tata to bolster its digital arsenal. The development comes at a time when Tata Group’s digital venture Tata Digital is planning to launch a super app that is expected to be launched by December this year with US-based retail giant Walmart as an investor.  

If the talks are successful, Tata group could pay around $500-700 million in cash to a clutch of financial investors, mainly private equity funds and China’s Alibaba group, BigBasket’s largest investor, people aware of the talks told Mint.  

Earlier this month, Inc42 had reported that  theTata Group was looking to acquire a 20% stake in the online groceries unicorn. The strategic deal could come through by the end of October and buy two board seats for the Tata Group as well. 

BigBasket, which has the biggest market share in the online grocery space, saw new customers on its delivery platform increasing by 84% between January and July, while the retention rate of customers grew 50%.

During the pandemic, the online grocery delivery segment has gained a lot of traction as the behaviour of consumers have drastically changed. The consumers are not only shopping online, but they are also looking to buy groceries online, courtesy the restriction due to Covid-19.

The US-based market research company Forrester Research shows that India’s online grocery market could make $3 Bn in sales this year, representing a whopping 76% hike compared to $1.7 Bn last year. Meanwhile, the ecommerce segment is expected to grow by 6%, amounting to $35.5 Bn this year. However, compared to last year, the firm would also seek a hike of $2 Bn.

In India, BigBasket and Grofers are the biggest players that primarily focuses on the online grocery segment. In 2019, BigBasket claimed to have over 10 Mn registered customers and processed 1 Lakh orders per day. However, the company’s scaled 3x during the pandemic, catering to 3 Lakh orders per day. The company also noted a 35% influx in sales in April and has to scale up its people and slot availability.

The company is said to be in talks to raise $350-$400 Mn funding from Singapore-based Temasek, hedge fund Tybourne Capital and former US vice-president Al Gore’s Generation Investment Management at post-money valuations of $2 Bn. Overall, the company has raised $1.02 Bn across 14 funding rounds from investors like Alibaba, Helion Venture Partners, Bessemer Venture Partners, Abraaj Group, LionRock Capital and others.

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