Digital wallet major Paytmâ€™s ecommerce arm Paytm Mall is likely to pick up a stake in online grocery player BigBasket. This comes at a time when talks between Amazon and BigBasket for a possible merger have been stuck the past few weeks, reports the Economic Times.
Paytm Mall is likely going to pick up a significant minority stake for about $200 million and has even begun due diligence for the same.
After it last raised funds in March 2016, BigBasket was valued t about $450 million and is now seeking a pre-money valuation of around $550 million.
Sources have told ET that the deal will help Paytm Mall strengthen its online-to-offline strategy using BigBasketâ€™s partnerships with corner stores. This in turn should help it take on Amazon.
Amazon recently got the government approval for its $500 million FDI investment in food retailing. With the licence in hand, Amazon will start selling groceries and other food products online. BigBasket too, in addition to rival Grofers has applied for the licence.
BigBasket has been through several negotiations in the past few months. Apart from exploring a sale to Amazon, it is also in talks with rival Grofers for a possible merger and is also looking to raise funds.
ET reports that BigBasketâ€™s discussions with Amazon India have been on hold as both parties fail to agree on various issues, including valuation. While BigBasket sought a valuation of $700-800 million for the entire company, Amazon had proposed an initial valuation of less than $500 million.
Paytm Mall, which is a part of One97 Communicationâ€™s entity Paytm Ecommerce recently raised $200 million from Alibaba Group and SAIF partners in March.
Investment bank Morgan Stanley is advising BigBasket in these talks.
BigBasketâ€™s private labels including Fresho for fruits and vegetables and Happychef for gourmet foods accounted for over one-third of its sales.
BigBasket has also started express delivery in 60 minutes last year to take on Grofers. The company registered about Rs 1,400 crore in revenue in FY17.