If the talks are successful, Tata group could pay around $500-700 million in cash to a clutch of financial investors, mainly private equity funds and China’s Alibaba group, BigBasket’s largest investor, the people said, requesting anonymity
A Tata group spokesperson declined to comment.
Click on the image to enlarge
For the Tata group, the deal is aimed at securing as much control as possible in India’s fast-growing e-commerce market before RIL and Flipkart become too big, said the second person. Mint reported on 14 October that Tata group has joined the conversation to pick up a minority stake in BigBasket, which has been looking to raise $200 million in growth capital.
BigBasket has seen strong tailwinds due to the covid-19 pandemic, attesting industry estimates that grocery will be the biggest driver of online e-commerce, contributing 40% to gross merchandise volume between 2019 and 2024. The online penetration of the grocery market is currently only at 0.5% and absolute size is $2 billion. But it is estimated to grow from $1.9 billion in 2019 to $3 billion by this year-end, according to a September RedSeer report.
BigBasket, which has the biggest market share in the online grocery space, saw new customers on its delivery platform increasing by 84% between January and July, while the retention rate of customers grew 50%.
“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, told investors recently.
BigBasket is India’s largest online food and grocery firm with over 18,000 products and 1,000 brands. The Bengaluru-based startup, which recently became a unicorn, has a market share of more than 50% in the online grocery market. Its revenue grew a massive 70% to ₹3,200 crore in FY19. Although losses widened, it crossed an annualized gross sales run-rate of $1 billion for the first time in May.