Tata Group inches closer to $1.3 billion BigBasket deal

The Tata Group is set to buy 80 per cent stake in BigBasket for $1.3 billion taking the India’s e-commerce retail market to a more competitive level. In the past recent months driven by the COVID-19 pandemic, the e-commerce segment has recorded significant growth and mega-collaborations.

BigBasket and the Tata Group, through five months of negotiations, have agreed on the deal structure, with the Indian giant likely to buy 50 to 60 per cent from existing investors, including Alibaba and others. The Tata Group will infuse fresh money into India’s biggest online supermarket by buying shares, about 20 to 30 per cent, which will give it almost 80 per cent stake in BigBasket. According to Livemint, the deal will be formally announced in the next couple of weeks.

A source, as per the report, said the main objective of the acquisition is to win a large market share in one shot. “Big Basket can make that possible and the deal will also help Tata Group in conceptualizing its proposed Super App by adding a wide range of household items and grocery products from the online supermarket,” he said. “The valuation of BigBasket is likely to be higher now as online grocery business has grown significantly after March as customers prefer to shop online to avoid physical contact due to COVID-19.”

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In late September, there had been reports of BigBasket being in parallel discussions with financial investors such as Singapore’s Temasek, US-based Generation Investments and hedge fund Tybourne Capital for its new round of funding. The online supermarket was also keen on an IPO. Moreover, as per TOI, BigBasket is expected to get a pre-money valuation of about $1.6 billion and, depending on the final capital infusion in the company, its valuation in the current round can reach up to $2 billion. Moreover, the online supermarket recently hit gross merchandise value of $1 billion.