The Tata Group is in the final stages of acquiring a majority stake of 68% in BigBasket, an online grocery brand that is runs and operated by Supermarket Grocery Supplies. It is going to acquire it for about Rs. 9,300 – Rs. 9,500 crore, said a source close to the development. The deal is the biggest in the online grocery space so far values BigBasket at Rs. 13,500 crore. This comes about 20 months after the Hari Menon-led Bengaluru Company had entered the unicorn club.
The deal, which is expected to close in the next four to five weeks, will give exit to investors Alibaba, Abraaj Group, and IFC. The parties are awaiting approval from the Competition Commission of India (CCI).
The top management, including co-founder and CEO Hari Menon, will continue to stay on board, said the source. The Tata Group and BigBasket refused to comment on the matter.
The acquisition of BigBasket fits the Tata Group’s plans for serious online play. Tata Sons Chairman N Chandrasekaran has in the recent past talked about the group’s ambitions to have a super app.
In response to a potential stake purchase in BigBasket, a Tata Group spokesperson had said last year that “Our e-commerce play will be really big and we will not contend with a minor stake in any company.”
“BigBasket has created a significant presence in the online space that has got certified further in the past 12 months. For Tatas to make a transition from a physical to a digital space, an inorganic route makes some sense,” said analyst and chief executive of Third Eyesight Devangshu Dutta. This transaction would allow the conglomerate access to a large customer base.
According to a RedSeer and BigBasket report, the total size of the e-grocery market in the country is expected to grow from $1.9 billion in 2019 to $3 billion by the end of 2020. At an annual growth rate of 57%, it is expected to touch $18 billion by 2024.
With big names including Tatas, Amazon, Reliance, Walmart-owned Flipkart, and Udaan making their presence felt in this space, e-grocery is emerging as one of the most converted retail segments. As marquee players line up, BigBasket will need serious money to remain a leader in the game, according to experts. Hence, a deal with the Tatas coming in as a strategic partner makes perfect sense, they say.