For the last few weeks, Experts discussed the Tata group and Big Basket deal a lot. Different news related to the acquisition was taking round over the media portals. People were expecting that the Tata group will acquire a 50-60% stake in Big Basket. Some news portals also reported that Tata will acquire a 30% stake owned by Alibaba in Big Basket. Chinese retail giant Alibaba is the main investor of Big Basket.
Finally, the much-awaited deal has reached the final stage. According to an ET report, Tata is all set to acquire a 68% Big Basket stake at the cost of Rs 9500 crore. While TechCrunch reported that the deal is completed at $1.8 billion to S2 billion. As per this report, Alibaba will completely exit from the Big Basket.
Tata Group Acquiring 68% stake in Online Grocery Platform
This deal will further boost the ‘Super App’ project of the Tata group which is going to start soon. Under this project, Tata will bring all major platforms like Manufacturing, Consumer, Retails, Health, etc under one umbrella.
Big Basket planned to raise funding of $200 to 300 million from new and existing investors to reach a market cap of $2 billion. The company was in touch with few existing investors related to the latest funding round. And suddenly, Tata came up with the acquisition plan.
Big Basket was started in 2011 by VS Sudhakar, Hari Menon, Vipul Parekh, VS Ramesh, and Abhinay Choudhari. In the beginning, the company did not get any success due to the unacceptance of online grocery ideas. People did not have the trust to buy online items. Slowly, India accepted the online grocery concept and Big Basket observed revenue growth. The company saw a surge in customers and investors a few years back.
With continuous growth, Big Basket became a unicorn in 2019 with a $150 million funding raise from Alibaba and other investors. The pandemic year 2020 became a boon for the online grocery startup. People switched to online grocery portals due to lockdown and other restrictions.
Importance of Current Deal for Tata Group
Most of the big giants like RIL, Amazon, Flipkart are trying to take the control of the digital platforms to establish their monopoly. The current deal will make Tata Group one step ahead to compete with these companies. With the current deal, Tata will also directly compete with Reliance JioMart.
Tata is also in talks with 1mg, an online pharma company, to acquire a majority stake. The deal is in pipeline for the last few months. A few days back, Tata Consumers also acquired the Soulfull brand maker to increase its operations directly to the consumer market.
The current deal will make the Big Basket valuation near to Rs 13500 crore. Currently, it competes with Flipkart, and Amazon to capture the maximum market of online grocery. Tata group is leaving no stone unturned to establish its supremacy in the Indian Market.
The current deal will strengthen the Tata consumer offerings in the online grocery market. Analysts also believe that Tata came into partnership with Big Basket to give stiff competition to its main rival Reliance Industries Limited. As per the current agreement, co-founder and CEO of Big Basket, Hari Menon will continue with Big Basket.