India: Alibaba seeks competition panel nod to buy stake in online grocer BigBasket

An employee weighs tomatoes after packing them at a Big Basket warehouse on the outskirts of Mumbai November 4, 2014. REUTERS/Danish Siddiqui/Files

To capture a slice of India’s growing hyperlocal delivery space, Chinese Internet giant Alibaba has sought the approval of the Competition Commission of India (CCI) to acquire a stake in online grocery startup BigBasket.

The financial details or the quantum of stake sought was not disclosed in the filing to the competition panel

“The proposed combination relates to the acquisition and purchase of shares of Supermarket Grocery Supplies (BigBasket parent) by Alibaba Singapore,” said a CCI notice.

“The Parties believe that the Proposed Transaction does not give rise to competition concerns regardless of the relevant market definition used for the purpose of the filing,” it added

Earlier this year, it was reported that Chinese e-commerce giant Alibaba Group Holding Ltd. and its Indian associate Paytm E-commerce Pvt Ltd were in talks to invest about $200 million for around 20 per cent stake in India’s leading online grocer.

In July, Alibaba and Paytm were reportedly in a 60-day exclusive pact with BigBasket and were conducting due diligence.

Despite the influx of a numerous online grocers a couple or years ago, this space has been on consolidation path over the last one year. SAIF Partners-backed PepperTap was one of the most prominent closures in the space, having shut its operations last year after raising around $50 million.

There were also reports of BigBasket being in talks to merge operations with its closest rival SoftBank-backed Grofers, which also had to scale down operations some time back.

BigBasket has operations in Bengaluru, Hyderabad, Pune, Mumbai, Chennai, Delhi-NCR, Ahmedabad, Patna, Kolkata, Jaipur, Vijayawada, Indore, Punjab and Lucknow. The company has raised over $200 million from investors including Abraaj Group, Bessemer Venture Partners, Growthstory, Helion Venture Partners, IFC and Sands Capital.

According to a report by RedSeer, while 2016 was a challenging year for the online grocery segment, sales are likely to rebound by the end of 2017.

“2017 is on track to be a robust year for E-FMCG/Grocery market with 60% y-o-y growth likely. Sales have been driven largely by volume growth—which points to growing acceptance and penetration of online grocery among consumers. Additionally, AOV growth has also been significant, driven by increased share of cosmetics and other premium products in shopping basket,” said RedSeer in the report.

Global e-commerce giant Amazon has also been trying hard to break through into the hyperlocal delivery space. Earlier in the year, there were reports of the US-based online market place being in talks to buy stake in BigBasket for better penetration into this space.

It was later reported that Amazon was keen to pick up stake in Grofers to take on BigBasket.

According to a report by Franchise India, the online groceries market is expected to be Rs 270 crore market by 2018-19.

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