Tata Sons To Acquire BigBasket In A $200 Million Deal, Post Investment Valuation To Reach $2Billion

Tata super app
Tata super app

The online retail market has seen unprecedented growth since the COVID-19 pandemic led lockdowns has hit the country. Reliance is raising funds and is seen fully aiming to enter the retail market. Tata follows them as they are also being reported to be interested in entering the online retail sector. It is reported that the Tata group is having ongoing talks to buy stakes in the online grocer BigBasket.
According to a report by the news agency Mint, they had cited two persons who have claimed that the Mumbai based conglomerate is in their first steps to join hands with the online grocer BigBasket which is backed by the Chinese conglomerate, Alibaba Group. The Chinese backed Indian online grocery company is looking to raise around $200 million in primary equity infusion.
The deal will boost BigBasket’s value and raise it to be nearly $ 2 billion, an almost 40% premium to its last fundraise according to the statement of the two persons.
global investors such as Singapore’s Temasek Holdings and Generation Investment Management is also being said to be interested to be a part of the fundraising event. According to the report, Generation Investment Management is a private equity firm co-founded by former US vice-president Al Gore and former Goldman Sachs’ Asset Management head David Blood in 2004.
Mint also.published the comments of the persons with who knows of these. He said, “Tata, Temasek and Generation Investment Management are in advanced talks with BigBasket. The deal size is around $200 million, which will be entirely primary capital to boost the company’s growth. The transaction in all likelihood is a pre-IPO round, and a public listing is expected in 18 months.”
Although talks of a deal are on papers, the size of the stake that the Tata group is interested to buy or the amount they are interested to invest has not been disclosed.
Another Mint report from 25th May said that BigBasket has appointed Goldman Sachs and Morgan Stanley to help raise funds and that the e-grocer is eyeing a valuation of $2 billion in its latest round.
Mint also reported the comments of a person who is a consultant. He said on basis of anonymity, “Covid has led to a metamorphosis of India’s retail sector, and with consumers adapting to online shopping swiftly, the segment has become even more attractive for investors. Tata’s interest in BigBasket could be a result of that.”
Tata has a long history in the Indian offline retail market. The company entered the online retail segment in 2016 as they launched their online retail platform, Tata Cliq. Chandrasekaran, chairman of Tata Sons, the parent firm of Tata group has recently also said that the company is focused on its online business. He said that they are building a super app, which will provide the company’s offerings under a single platform, that will go live in December or January. The company’s interest in BigBasket comes at a time when they are on the way to enter the online retail market in a big way. Their super application is said to provide facilities like food and grocery ordering to fashion, electronics, insurance, healthcare and bill payments.
Mint also published reports of UBS Research note dated 21 September, which predicts a faster overall growth of the Indian retail market and said, “We estimate the proportion of modern retail in terms of sales could increase from 5.7% of the retail market in FY18 to 13.4% in FY23.”