BENGALURU: The Tata Group is exploring the acquisition of a large stake in Bigbasket in a deal which has the potential of being the biggest investment by a local conglomerate in a new-economy business. The salts-to-software conglomerate has discussed taking up to 51% stake in the grocery e-tailer. This will include a fresh capital infusion for business expansion besides the purchase of shares from existing shareholders like Chinese e-commerce giant Alibaba, said three sources briefed on the matter.
The development comes at a time when the Indian government has heightened restrictions on Chinese investments amid geopolitical tensions, including the border clash. Alibaba holds 25-30% in Bigbasket, having first invested in the company in 2018. The potential entry of Tatas could give the 10-year-old company a buffer against the backlash on its foreign shareholdings and intensifying competition with the entry of Reliance Industries’ JioMart, said the sources.
A deal has still not been finalised and the potential shareholding of Tatas will depend on valuations and result of discussions with existing shareholders, cautioned the sources. The discussions with Alibaba will be important as it has various rights, including the right of first refusal (ROFR) on a stake sale to competitors, said one of the sources briefed on the matter. TOI could not ascertain if Tatas are listed as competitors.
“Even if Tatas come in, the company will continue to be run by the same management and it will give them a long-term backer with deep pockets,” said the source mentioned earlier. The move is expected to be a part of the Tatas’ super-app play and will open another front in the grocery commerce wars between Reliance JioMart, Amazon India and Walmart-owned Flipkart besides startups like Grofers.
The conglomerate had set up Tata Digital last year for the effort. “There could be a potential tie-up with Trent-owned Star Bazaar as well for pick-up and distribution,” said another source briefed on the matter. Tata Group and Bigbasket spokespersons declined to comment when contacted by TOI, while an emailed query to Alibaba did not elicit a response.
The development comes as Bigbasket has also been in parallel discussions with financial investors like Singapore’s Temasek, US-based Generation Investments and hedge fund Tybourne Capital for its new round of funding, as TOI reported on September 29. Bigbasket is also eyeing an IPO next year, TOI had reported. Bigbasket is expected to get a pre-money valuation of about $1.6 billion and, depending on the final capital infusion in the company, its valuation in the current round can reach close to $2 billion.
Bigbasket’s annualised gross sale run-rate crossed $1 billion for the first time in May, when it recorded Rs 650 crore, or almost $90 million, of sales. The monthly sales number have now reached about Rs 750 crore or about $102 million last month, pegging annualised run rate to over $1.2 billion. The company is also targeting operating profitability soon. Bigbasket’s new round also comes as the company has been consolidating its position in the space, especially the morning milk delivery market where it acquired DailyNinja earlier this year.