Tata Group set to buy majority stake in online grocer BigBasket

 Tata Group set to buy majority stake in online grocer BigBasket

Steel-to-software conglomerate Tata Group is close to acquiring a controlling stake in online grocery retailer BigBasket, two people directly aware of the matter told The Capital Quest.

Mumbai-headquartered Tata Group will invest about Rs 9,000-9,500 crore ($1.25-1.30 billion at current exchange rates) in Bengaluru-based BigBasket to gain control, one of the persons said, asking not to be identified.

The conglomerate will buy out some existing early-stage investors and venture capital backers of BigBasket and also make a fresh capital infusion in the online grocer, the person said.

The deal will heat up the online grocery segment as it pitches Tata Group in direct competition to Walmart Inc-owned Flipkart, Amazon.com Inc and the retail arm of billionaire Mukesh Ambani-led Reliance Industries Ltd.

BigBasket also competes with online grocery retailer Grofers, which is backed by Japanese conglomerate SoftBank.

The planned transaction is Tata Group’s biggest move yet in the e-commerce sector, which has expanded at a quick pace as the global coronavirus pandemic prompted more people to shop online.

The group already operates brick-and-mortar grocery and supermarket stores under the brand name Star Bazaar. It also has a large consumer products business, electronics retail chain Croma and apparel retail chain Westside.

The group entered the retail sector in 1917 with the launch of Tata Oil Mills Company, or TOMCO, its website shows. TOMCO merged with Hindustan Unilever Ltd, the local unit of Unilever Plc, in 1993.

BigBasket valuation, investors

The people cited above also said that the Tata-BigBasket deal is subject to regulatory approval, which will “come anytime soon”.

Television news channel ET Now reported that Tata Group will buy a 68% stake in BigBasket, operated by Supermarket Grocery Supplies Pvt. Ltd. However, this could not be independently verified.

This indicates that Tata Group plans to purchase BigBasket at a valuation of around US$1.8-1.9 billion.

Hari Menon, who founded BigBasket a decade ago, will continue to lead the company after the deal closes, local media reports said.

Local media reports also said that the deal would involve the exit of Chinese e-commerce behemoth Alibaba Group and the Abraaj Group, a Dubai-based private equity firm that collapsed two years ago. Alibaba is the single-largest shareholder currently.

The other investors of BigBasket include International Finance Corporation, Indian PE firm Ascent Capital, the UK’s development finance institution CDC Group Plc and South Korea’s Mirae Asset. Helion Venture Partners, Sands Capital, Bessemer Venture Partners are among the other investors.

BigBasket currently operates in 22 India cities, according to its website. It reported a 35% rise in revenue for 2019-20 to Rs 3,818 crore.

Ankit Doshi

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