Online grocer BigBasket is planning to raise around $150-200 million, two people aware of the development said, as the coronavirus outbreak and the nationwide lockdown are expected to boost online grocery sales.
Supply chains were disrupted in the early days of the lockdown but, subsequently, e-commerce has emerged as the most viable alternative for people to source essential supplies such as groceries, as restrictions on movement and the fear of contracting the disease prompted more people to try home deliveries.
BigBasket has “appointed Goldman Sachs and Morgan Stanley to help raise funds. The plan is to raise between $150 million and $200 million”, said one of the two persons mentioned above seeking anonymity as he is not authorized to speak with the media.
BigBasket is eyeing a valuation of $2 billion in its latest round, the person said.
Last year, BigBasket raised $150 million at a valuation of $1.2 billion in a round that saw participation from South Korea’s Mirae Asset-Naver Asia Growth Fund, UK’s CDC Group, and existing investor Alibaba.
“The lockdown will impact consumer behaviour and more people will be using e-commerce for purchasing essentials like groceries going ahead. While many other tech firms have jumped into selling groceries, this has been BigBasket’s mainstay from day one and so they are expected to benefit disproportionately from this tailwind in the coming months,” the first person said.
Food aggregator Zomato began grocery deliveries in April, while several others including social e-commerce startup Meesho, Snapdeal and Paytm Mall, too, have entered or expanded their grocery delivery service.
This round of fundraising could possibly be the last private round of capital infusion in BigBasket before it goes public, said the second person cited above, also requesting anonymity.
“They are preparing to go public and the idea is that 12 months from this round of fundraising, they will look to go public either in India or overseas,” he said.
BigBasket, Goldman Sachs and Morgan Stanley declined to comment on the development.
To be sure, while online grocery sales are expected to see better days ahead, a recent change in foreign direct investment (FDI) policy could pose some troubles for BigBasket.
Last month, the government announced changes in the FDI policy, banning fresh investments from India’s neighbours, including China, through the automatic route. Chinese e-commerce giant Alibaba is BigBasket’s biggest investor. In April, BigBasket raised $50 million debt funding from Alibaba. The change in policy makes it mandatory for all Chinese investors to seek government approval before investing in Indian firms, which may affect further funding rounds in startups by top Chinese investors.
Mint reported on 11 May the government may issue clarifications to the changes in FDI norms for Chinese companies planning to invest in India.
