The Tata Group has reached an agreement to acquire a 68% stake in online grocery startup BigBasket for Rs 9,100-9,500 crore, according to reports. The transaction, which involves a mix of primary and secondary sale of shares, will provide a full exit to Alibaba and Abraaj Group who are currently stakeholders in BigBasket.
The deal is in its final stages, and according to reports, is expected to be completed in the next 4-5 weeks.
The parties are awaiting regulatory clearances from the Competition Commission of India. Post the deal, BigBasket's top management, including co-founder Hari Menon, are expected to continue for three to four years.
According to data from business intelligence platform Paper.vc, Alibaba Group holds a 27.58% stake in the company, while Abraaj owns about 18.05%. Tata Group will get close to the majority stake it is seeking in BigBasket by acquiring the stakes of just these two investors. In addition, the transition is expected to provide partial exits to smaller investors.
This comes at a time when Tata is looking to launch a “super app” to bring all its consumer businesses under one roof, as competition with Amazon and Reliance heats up in India’s burgeoning e-commerce market. It aims to provide services ranging from food and grocery to fashion and electronics to insurance, financial services, education and healthcare.
BigBasket’s last round of valuation was $1.2 billion and the new transaction is seen as one of the biggest M&A (merger & acquisition) deals. This deal reportedly values BigBasket at Rs 13,500 crore.
BigBasket had said in September last year that the number of new customers on its platform had jumped by 84% compared to pre-pandemic levels and retention rates had increased to 50%. The e-grocer added that it was processing over 20 million orders per month with an annual run-rate of $1 billion.
Meanwhile, Tata Group is in talks to finalise a secondary transaction of $200-250 million to acquire a 55% stake in online pharmacy 1mg. Tata’s investments in BigBasket and 1mg are expected to facilitate the launch of the company’s digital service on the lines of a super app.