Tata acquires majority stake in BigBasket, invests $219 million
The Tata group has completed the purchase of a majority stake in online grocer BigBasket that would pitch the conglomerate against established heavyweights such as Amazon, Reliance Industries Ltd (RIL), and Walmart Inc
PremiumThe Tata group has completed the purchase of a majority stake in online grocer BigBasket that would pitch the conglomerate against established heavyweights such as Amazon, Reliance Industries Ltd (RIL), and Walmart Inc.-owned Flipkart in India’s booming e-commerce market.
The deal was carried out by Tata Digital, a wholly-owned unit of the Tata group’s holding entity Tata Sons Pvt. Ltd. Financial details of the transaction were not disclosed.
Separately, regulatory filings dated 27 May showed that Tata Digital had committed an investment of ₹1,591 crore ($219 million) in BigBasket, of which the e-grocer has received ₹1,116 crore (about $154 million).
Supermarket Grocery Supplies Pvt. Ltd, the owner and operator of BigBasket’s B2B business, issued 11 million fully paid-up and 4.7 million partly paid-up equity shares at ₹1,005.59 a share to Tata Digital to raise ₹1,116 crore, according to filings with the corporate affairs ministry.
BigBasket’s largest shareholders, Chinese internet giant Alibaba Group Holding Ltd and private equity firm Actis have fully exited the company, said a person aware of the deal.
The founders of BigBasket and some early investors also made partial exits, the person said, requesting anonymity.
“Grocery is one of the largest components of an individual’s consumption basket in India and BigBasket, as India’s largest e-grocery player, fits in perfectly with our vision of creating a large consumer digital ecosystem. We are delighted to welcome BigBasket as a part of Tata Digital," said Pratik Pal, chief executive of Tata Digital.
E-mailed queries to BigBasket remained unanswered until press time.
The announcement of the deal comes about a month after the Competition Commission of India (CCI) approved aproposal by Tata Digital to buy up to 64.3%in Supermarket Grocery Supplies viaa mix of primary and secondary transactions.
Subsequently, Supermarket Grocery Supplies may take sole control of Innovative Retail Concepts Pvt. Ltd, which runs the B2C business of BigBasket, under licence from the former. The deal would give Tata Digital control of BigBasket’s retail and B2B business arms, as per the proposal.
“For many decades, we have seen Indian industrial houses and corporates reluctant to enter new-age business models or new-age sectors... the entire value creation and capital appreciation in the technology sector has been captured by foreign investors. This (deal) is path-breaking because one of India’s top industrial houses is taking a bold bet, paying a premium...," said K. Ganesh, founder of Growth Story, a Bengaluru-based investment firm and an early investor in BigBasket.
Last month, Tata Digital had committed to investing nearly ₹100 crore in e-pharmacy and health technology platform 1mg. The Economic Times reported recently that the Tata group is in talks to acquire health and fitness startup Curefit.
BigBasket operates in more than 30 cities, offering a grocery assortment of more than 50,000 stock keeping units with over 15 million customer orders each month. It also operates a farm-to-fork supply chain with a network of more than 12,000 farmers.
BigBasket was valued at $1.2 billion in October 2019, according to an auditor’s report, when it acquired hyper-local grocery delivery platform DailyNinja. In April last year, it raised around $60 million in a bridge round of funding led by Alibaba.
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