Tata eyes majority stake in e-grocer BigBasket

The Tata group is in energetic discussions to take a controlling stake in BigBasket by shopping for out a number of present buyers of the web grocer, three individuals straight conscious of the talks stated.

If the talks are profitable, Tata group may pay round $500-700 million in money to a clutch of monetary buyers, primarily personal fairness funds and China’s Alibaba group, BigBasket’s largest investor, the individuals stated, requesting anonymity

“The talks are currently hinged on the extent of say Tata group will have in the company post the deal,” stated one of many three individuals.

 

“While BigBasket’s existing investors are not averse to the idea of selling a controlling stake to Tata group, they also want the current management, led by the founders, to remain at the helm,” this particular person stated. “Investors also want BigBasket to hit the IPO (initial public offering) market by the next calendar year, irrespective of Tata’s coming on board,” the above particular person added.

A Tata group spokesperson declined to remark.

The deal, if struck, will give Tata group an instantaneous head-start to tackle the three large gamers in India’s thriving on-line grocery market: Reliance Industries Ltd, Walmart-owned Flipkart and Amazon.

For the Tata group, the deal is aimed toward securing as a lot management as doable in India’s fast-growing e-commerce market earlier than Reliance Industries Ltd and Flipkart change into too large, stated the second particular person.

Mint reported on October 14 that Tata group has joined the dialog to select up a minority stake in Bengaluru-based BigBasket, which has been trying to elevate $200 million in progress capital.

Along with Tata group, personal fairness funds Temasek and Generation Investment Management, too, had been in discussions to put money into BigBasket.

BigBasket has seen sturdy tailwinds because of the Covid-19 pandemic, testifying trade estimates that grocery would be the greatest driver of on-line e-commerce, contributing 40% to gross merchandise quantity between 2019 and 2024.

The on-line penetration of the grocery market is at present solely at 0.5% and absolute dimension is $2 billion. But it’s estimated to develop from $1.9 billion in 2019 to $Three billion by this year-end, based on a September RedSeer report.

BigBasket, which has the most important market share within the on-line grocery house, noticed new clients on its supply platform rising by 84% between January and July, whereas the retention charge of consumers grew 50%.

In August, Financial Times reported that Tata group is making ready a brand new platform, aimed for a December or January launch that may put collectively the salt-to-steel conglomerate’s different choices on a single platform, christened a “super app” by the Tatas.

“The app would eventually encompass services from food and grocery ordering to fashion, lifestyle, electronics, insurance, financial services, education, healthcare and bill payments,” N Chandrasekaran, chairman of Tata Sons, informed buyers lately.

BigBasket is India’s largest on-line meals and grocery agency with over 18,000 merchandise and 1,000 manufacturers.

The Bengaluru-based startup, which lately turned a unicorn, has a market share of greater than 50% within the on-line grocery market.

Its income grew an enormous 70% to ₹3,200 crore in FY19. Although losses widened, it crossed an annualised product sales run-rate of $1 billion for the primary time in May.