Tata Group Looks To Scoop 20% Stake In BigBasket To Expand Its Digital Empire

Tata Group is looking to acquire a 20% stake in online groceries unicorn BigBasket to catch up with other conglomerates like Reliance and Amazon. This partnership with BigBasket could help Tata to bolster its digital arsenal.

The strategic deal could come through by the end of October and buy two board seats for the Tata Group as well. The development comes as Tata Groups’ digital venture Tata Digital is underway to launch a super app to create a digital services behemoth offering a wide range of products in the retail space.

The app is expected to be launched by December this year with US-based retail giant Walmart as an investor. Walmart, which is also a rival of Amazon and Reliance, may invest nearly $20 Bn -$25 Bn in the company at a valuation of $50 Bn -$60 Bn.

The new app will help consumers avail of a range of services, including food and grocery ordering, fashion and lifestyle, consumer electronics and consumer durables, insurance and financial services, education, healthcare and bill payments. Financial Times had first reported about the Tata Group and BigBasket strategic partnership.

The online grocery delivery segment has definitely garnered a lot of interest from customers during the Covid-19 pandemic and resultant restrictions. People have not only been exploring online shopping, but have also become accustomed to buying groceries online.

According to US-based market research company Forrester Research, 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.

BigBasket and Grofers are the biggest players that solely focus on the online grocery segment in India. Until last year, BigBasket had over 10 Mn registered customers and claimed to process 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.

BigBasket has crossed an annual gross sale run rate of $1 Bn in May due to the rise in demand for groceries and essentials during the nationwide lockdown. In May, alone, the company clocked $90 Mn (INR 650 Cr) in sales after discounts.

The company is now reportedly 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.