India’s largest e-grocer BigBasket is in advanced negotiations with the Tata Group to divest a majority stake in favour of the salt-to-software services conglomerate, according to three people in the know. The deal, which is still evolving, could see the Bengaluru-based company sell around 50% stake for about $1 billion, the sources said.
China’s internet giant Alibaba, which holds around 26% stake in BigBasket, is expected to sell its entire shareholding in the company along with a group of early backers, said another person who did not want to be identified. Other investors in the e-grocery company include Ascent Capital, CDC Group and the Abraaj Group.
“While the talks have been ongoing for some time, it is still work-in-progress as far as the specifics go. It may eventually not lead to a transaction at all,” said one of the people cited above.
Tata Group executives, privy to the discussions, said the conglomerate is likely to execute the deal through its digital arm — Tata Digital — and that (the investment in BigBasket) “is just step one of several other similar tie-ups and collaborations that the group is looking to strike (in order) to scale its digital presence”. ET had earlier reported that the Tata Group has held talks with BigBasket as well as ecommerce companies Snapdeal and IndiaMart.
“This is not an easy deal to pull off with so many investors involved… but there should be some finality to the talks in a couple of weeks,” the sources said.
Tata Sons did not comment on ET’s query. Emailed questions sent on Monday to Hari Menon, co-founder and CEO of BigBasket, as well as to a spokesperson for Alibaba did not elicit a response.
Separately, BigBasket has also held discussions, sources said, to rope in a bunch of new investors like Singapore’s Temasek, US-based Generation Investment Management, Fidelity and Tybourne Capital, for a $350-400 million financing round. The fundraising process, which began earlier this year, coincided with Reliance Industries announcing its intent to push grocery eCommerce through JioMart.
Amazon and Flipkart are the other two deep-pocketed competitors in the grocery segment, which has recorded exponential growth during the pandemic-induced lockdowns.
A Tata Group executive speaking to ET on the condition of anonymity said the conglomerate is looking to acquire internet companies as “scalability of business through a combination of online and offline is seen as critical for future growth”.
“Currently, none of the group’s (Tata Group’s) retail businesses have that depth of scale in the eCommerce space,” the person said.
In recent times, Tata Sons has also committed significant capital to its retail arms such as Trent, which operates Westside and Landmark, a bookstore chain, as well as Infiniti Retail, a subsidiary of the Tata Group that runs Croma stores.
The Covid-19 led lockdown has helped players like BigBasket shore up order volumes amid a significant shift towards online shopping. At the start of the lockdown in April, BigBasket fulfilled 160,000 orders daily but its base of consumers has steadily grown since then, with the retailer clocking Rs 750-900 crore in monthly sales. The company is expected to close this fiscal year with about Rs 9,000 crore in gross sales.
