India: Tata group eyes majority stake in online grocer BigBasket

BigBasket founder Hari Menon. Photo: Mint

The Tata group is in active discussions to take a controlling stake in BigBasket by buying out several existing investors of the online grocer, three people directly aware of the talks said.

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

“The talks are currently hinged on the extent of say Tata group will have in the company post the deal,” said one of the three people. “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,” this person said. “Investors also want BigBasket to hit the IPO (initial public offering) market by the next calendar year, irrespective of Tata’s coming on board”.

A Tata group spokesperson declined to comment.

The deal, if struck, will give Tata group an immediate head-start to take on the three big players in India’s thriving online grocery marketplace: Reliance Industries Ltd, Walmart-owned Flipkart and Amazon.
Sarvesh Kumar Sharma/Mint
Sarvesh Kumar Sharma/Mint

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.

Along with Tata group, private equity funds Temasek and Generation Investment Management, too, were in discussions to invest in BigBasket.

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%.

In August, Financial Times reported that Tata group is preparing a new platform, aimed for a December or January launch that will put together the salt-to-steel conglomerate’s varied offerings on a single platform, christened a “super app” by the Tatas.

“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.

This article was first published on livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.