The Tata group is looking at a majority stake in online grocer BigBasket, heating up competition in the online grocery delivery space, which already has the presence of Reliance Retail, Flipkart and Amazon.
The Tata group is reportedly looking to buy out several existing investors. BigBasket’s current investors include the Alibaba group, Trifecta Capital Advisors, Mirae Asset Venture Investment, CDC group, Ascent Capital and others. Alibaba currently holds a 26% stake in the e-grocer, and could sell its stake to Tata along with other early investors.
According to Mint, the deal is currently dependent on the extent of the stake that the Tata group can get. “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," the person told Mint.
According to the Economic Times, the Tatas could potentially pick up a 50-60% stake for around $1 billion. Mint put the figure at $500-700 million.
“Investors also want BigBasket to hit the IPO (initial public offering) market by the next calendar year, irrespective of Tata’s coming on board,” sources told Mint.
BigBasket operates in 26 cities, and reportedly turned profitable thanks to the lockdown spurring online delivery. CEO Hari Menon earlier told Financial Express that because of the lockdown, their new customers by value went up by three times, orders tripled and by number of members 2.6 times as compared to pre-Covid.
This comes at a time the Tatas have been looking at a super app that will tie together the group’s various consumer businesses, in order to take on Flipkart, Amazon and Reliance.
However, it was also earlier reported that BigBasket was also in talks with various investors including Temasek, Fidelity, Tybourne Capital and Generation Partners for a $350-400 million financing round.
Experts told Business Standard that BigBasket could be looking to sell a stake as they might not have proper visibility in terms of investments from large investors, and may be looking for strategic investors. It also makes sense for Tata looking to go omnichannel.
“For them to have serious play online, inorganic is the quickest route. So buying a majority stake in a player like BigBasket makes sense,” said Devangshu Dutta, Chief Executive of Third Eyesight, told the business daily.