According to local Indian media, Tata Group, a Mumbai-based conglomerate, is in talks to acquire an 80% equity stake in Creative Retail Concepts Private Ltd (BigBasket), India’s biggest online food and grocery store, for USD 1.3 billion.
BigBasket will value the prospective deal at c. USD 1.6bn which according to AnalyzeMarkets figures, suggests a P/S transaction multiple of 3.7x, based on BigBasket’s FY2019 sales.
Tata is expected to acquire the controlling stake from BigBasket’s current investors, including the Chinese Alibaba Group, which holds about 26% of the Bengaluru-based online grocer’s stake.
Due to the pandemic and strained ties between China and India, the possible transaction debate comes at a time of the exponential rise in demand for online grocery services in India.
AnalyzeMarkets announced last month that SSAB AB, a sheet and plate steel producer based in Stockholm, confirmed that it is in talks with Tata Steel Ltd for a possible acquisition of the IJmuiden steel mill and related downstream assets.
In India’s major cities, including Bangalore, Hyderabad, Mumbai, Chennai, Delhi, and others, BigBasket offers over 18,000 products and more than 1,000 brands through its website.
Its revenue rose by 69% y-o-y to INR 3,200 crore, while its net loss rose in FY19 by 94% y-o-y to INR 348 crore.
BigBasket’s major shareholders include Alibaba Group, Ascent Capital, CDC Group, and the Abraaj Group.
During the pandemic, online groceries in India have risen at a rocketing rate, but the field is still wide open as none of the players have yet made a dent. Approximately half of the $1 trillion retail markets in India comprises grocery sales and there is tremendous growth potential.
The pandemic is shortening timelines for developing in-house capabilities and could serve as a playbook for Tata, Walmart’s $16 billion Indian online retailer acquisition, Flipkart, in the summer of 2018.
At a time when the race for Indian online shoppers is heating up, the Mumbai-based Tata Group, with combined revenue of about $ 113 billion and marquee brands such as Jaguar Land Rover and tea maker Tetley, is scouting for local e-commerce properties. Although the JioMart of billionaire Mukesh Ambani aims to shake up the market dominated by Amazon.com Inc. and Walmart Inc.’s local divisions, Tata seeks future acquisitions to close the gap with its rivals.
