BigBasket is currently in the advanced stages of discussion for selling its 68 per cent stake to Tata Group for around $1.2-1.3 billion. According to sources familiar with the matter, the stake sale to Tata would value BigBasket at approximately $1.8-1.9 billion.
India’s online grocery market, which contributed 0.3 per cent to the $603 billion food and beverages market in India, has grown 73 per cent in 2020 from the preceding year. The gross merchandise value (GMV) of the e-grocery market increased from $1.9 billion in 2019 to $3.3 billion in 2020, taking its penetration in the overall market to 0.6 per cent on the back of Covid tailwinds primarily, according to a RedSeer analysis. The online grocery market is currently led by BigBasket, Grofers, Amazon Pantry, Flipkart Supermart, JioMart, Dunzo, and more. The fruits, vegetables, and staples category saw the strongest shift from offline to online in 2020 with its GMV share in the e-grocery segment increasing from 39 per cent to 47 per cent. This was led by customers prioritising buying essentials online followed by a shift from dining out to home-cooked meals.
Importantly, BigBasket is currently in advanced stages of discussion for selling a 68 per cent stake in the company to Tata Group for around $1.2-1.3 billion. According to sources familiar with the matter, the stake sale to Tata would value BigBasket at approximately $1.8-1.9 billion. The deal may take 3-4 weeks to get completed post which BigBasket Co-founder Hari Menon will stay on board. The deal would provide an exit to BigBasket’s investors Abraham Group and Alibaba.
BigBasket declined to comment on the development while Tata Group didn’t reply to the email query.
“Tata group has a significant presence in the Indian retail market across the categories, and given an online presence is now necessitated, the potential deal will ensure faster entry into the eGrocery segment. For Bigbasket, the deal helps in getting the needed funds and support for the next wave of growth,” said Rohan Agarwal, Director, RedSeer. The development came ahead of BigBasket’s plan to IPO in the coming years. “There are exits needed, people have to exit businesses and the best form of doing it is through an IPO,” Menon had said at the Prarambh Start-up India International Summit last month.
BigBasket had reported a 6.7 per cent jump in net losses to Rs 611 crore in FY20 up from Rs 572 crore in FY19 while its total income increased from Rs 2,804 crore in FY19 to Rs 3,822 crore in FY20, according to the data from Tofler. “The company has been incurring significant losses over the years and has raised equity from shareholders to fund its operations. Subsequent to the year-end, the company raised Rs 3,935 million (Rs 393.5 crore) from certain investors based on which along with its existing working capital level at year-end, it believes it will be able to fund its operations for the next year,” the company had said in its regulatory filing.
Meanwhile, the online grocery market is likely to grow to $5.3 billion in size in 2021 and up to $26 billion by 2025 driven by digital adoption in markets beyond urban geography. According to RedSeer, multiple large winners addressing varying customer segments such as convenience buying, value buying etc., and use-cases such as stock-up, top-up and on-demand.