Tata Sons Pvt. Ltd, the holding company for the multi-billion-dollar business conglomerate, has made a formal application to India’s competition watchdog to buy a majority stake in top grocery e-tailer BigBasket.
Tata Digital, a wholly owned arm of Tata Sons, has sought to buy 64.3% of Supermarket Grocery Supplies Private Ltd, which owns online business-to-business grocery vertical business.bigbasket.com.
Tata Sons will acquire the stake through a combination of primary and secondary acquisitions, in one or more series of steps, as per a regulatory filing.
Subsequently, through a separate transaction, Supermarket Grocery may acquire Innovative Retail Concepts Pvt Ltd, which runs the consumer-facing arm of the BigBasket property under licence from Supermarket Grocery.
These two companies jointly run BigBasket. Foreign investment norms in the e-commerce sector necessitate creation of multiple entities to do business with capital from overseas.
Last month, multiple media reports had said that Tata Group was set to buy a controlling stake in BigBasket in a deal that would value the online grocer at close to $2 billion.
Tata Group, which also runs its own supermarket chain in a joint venture with UK’s Tesco, is looking to build a bigger e-commerce play. The proposed deal for BigBasket would pitch it against billionaire Mukesh Ambani’s Reliance Retail, which is the country’s biggest offline retail chain and is looking at an omnichannel play in the future.
Reliance Retail and global e-commerce behemoth Amazon have been locked in a bout over the control of BigBazaar, which is currently part of Kishore Biyani’s financially beleaguered Future Group.
Amazon is also trying to build a bigger presence in India’s grocery market, having acquired supermarket chain More from the Aditya Birla Group in partnership with PE firm Samara. Parallelly, it is scaling up its e-grocery service via Amazon Fresh. Walmart-owned Flipkart has also been trying to fight its way into consumers’ home and kitchen.
BigBasket had last raised significant funding almost two years ago when it scooped up $150 million (about Rs 1,040 crore then) in a round led by South Korean firm Mirae Asset-Naver Asia Growth Fund. The fund is a joint venture of Seoul-based Mirae Financial Group and South Korean internet company Naver Corporation.
The UK government-owned development financial institution CDC Group Plc had brought in around $40 million while China’s Alibaba Group—BigBasket’s largest shareholder—had committed $50 million afresh.
At that time, the deal had valued BigBasket around $2-2.3 billion.
BigBasket had entered the haloed unicorn club in February 2018, when it raised $300 million in its Series E round of funding led by Alibaba. Unicorn is a popular industry term for startups with a valuation of $1 billion or more.
Alibaba owns around a quarter of BigBasket. Dubai-based Abraaj Group, which faced a meltdown a couple of years ago, was another large shareholder of the company.
BigBasket’s other major shareholders include Indian PE firm Ascent Capital, International Finance Corporation (IFC), and venture capital firms Helion Venture Partners, Sands Capital and Bessemer Venture Partners.
BigBasket’s biggest competitor is Grofers, which counts Japanese conglomerate SoftBank as its main backer.