For the last few months, the Tata group is in a serious discussion with Big Basket and 1mg Pharma Startup to buy their major stakes. As per the latest reports, Tata group is all set to invest $200-250 million in Bengaluru based online grocery platform BigBasket. The last few months’ discussion has reached the final stage. Tata will acquire approximately 60% share of BigBasket.
TATA Group Acquiring Major Stake in BigBasket
If Tata acquires the major portion of BigBasket share, then earlier major investors Alibaba and Abraaj Group will exit from BigBasket. Currently, these two major investors hold 46% of BigBasket shares. Out of that total number, Alibaba acquires 27.58% stake and Abraaj group holds an 18% stake in Bigbasket.
As per The Economic Times report, the deal is confirmed between Tata and BigBasket. As per the confirmed deal, an investment of $200-300 million will be done by Tata Group. BigBasket 50-60% shares will be occupied by the Tata group. A formal announcement will come out soon.
Current shareholders don’t have any issue with this deal. They just want the founders of BigBasket on board. If the current deal is finalized, then BigBasket’s valuation will surge to $1.6 billion. The online grocery platform will be closer to its future IPO plan. BigBasket plans to start its IPO in 2022-23.
Deal Benefits to Tata Group and BigBasket
The new deal is a win win situation for both Tata and Big basket. The current deal will help the online grocery platform to expand its operations in more areas of India. Currently, BigBasket holds a 50% market of online grocery. With 18000 products and more than 1000 brands, it is way ahead of its competitors like Grofers, Amazon Grocery.
On the other hand, this deal will bring Tata group near to its dream digital project. With the concept of Super App, Tata plans to bring all industries under one umbrella.
“It will be a super app, a lot of apps in apps and so on . . . We have a very big opportunity,” Natarajan Chandrasekaran, Chairman of Tata Sons, had told the Financial Times, UK in August.
To achieve this, Tata group is acquiring all major businesses in different fields. 1mg pharma and Tata group investment talks are also in the last phase. A few months back, there was news about the IndiaMart acquisition by the Tata group.
Super App is expected to launch this year. Tata group is competing directly with Reliance to take hold of the Grocery market. BigBasket deal by Tata group is an answer to JioMart of Reliance Industries, whereas the 1mg deal will compete with Netmeds acquired by Reliance industries.
If the current deal is finalized then Tata group will pay around $1.3 billion to BigBasket Shareholders to acquire 60% shares of the online grocery platform. As per E-Commerce Analysts, this deal will be the largest mergers and acquisitions in the growing e-com industry.
Last year, BigBasket saw a surge of 84% in the user base, whereas 2 crore orders per month were delivered. Retention rates also increased from 40 percent to 50%.