Tata Digital buys majority stake in BigBasket, invests $219 mn in first tranche

Tata Digital, a 100% subsidiary of Tata Group holding entity Tata Sons, has acquired a majority stake in online grocery platform BigBasket, it said in a statement on Friday. The financial details of the deal were undisclosed.  

Separately, regulatory filings showed that Tata Digital, had committed an investment of Rs 1,591 crore (about $219 million) to BigBasket, of which the e-grocery company had already received Rs 1,116 crore (about $154 million). This is possibly the first tranche of the overall investment planned by the Tata Group firm to acquire the majority stake.

Supermarket Grocery Supplies, the company that owns and operates BigBasket’s B2B business, issued 11 million fully paid-up and 4.7 million partly paid-up equity shares at a price of Rs 1,005.59 a share to Tata Digital to raise Rs 1,116 crore, filings submitted with the Ministry of Corporate Affairs on May 28 showed. 

BigBasket’s largest shareholders, Chinese internet major Alibaba E-commerce and private equity firm Actis, have fully exited the company, a person aware of the transaction told TechCircle. The founders of BigBasket and some of its early investors also booked partial exits, the person said, requesting anonymity. Further details on the early investors who exited were not immediately available.

Email queries to BigBasket remained unanswered at press time. 

The deal announcement comes about a month after the Competition Commission of India (CCI) approved a proposal by Tata Digital to acquire up to 64.3% in Supermarket Grocery Supplies via a combination of primary and secondary transactions. Subsequently, Supermarket Grocery Supplies may acquire sole control of Innovative Retail Concepts, which runs the B2C business of BigBasket, under license from the former. The deal would give Tata Digital control of BigBasket’s retail and B2B business arms, the proposal had said.     

The deal pits the diversfied Tata Group against established heavyweights such as Amazon, Reliance Industries and Walmart-owned Flipkart in India's booming ecommerce market.   

“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,” Tata Digital CEO Pratik Pal said in the statement today.   

The Tata Group is building a digital consumer ecosystem addressing consumer needs across categories in a unified manner and online food & grocery is an important part of this ecosystem. Accordingly, this acquisition presents an attractive opportunity for the Tata Group in its overall vision of creating a digital ecosystem, the statement said. 

“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...” K Ganesh, founder of Bengaluru based investment firm Growth Story and an early investor in BigBasket said. 

Last month, Tata Digital had committed to investing nearly Rs 100 crore in epharmacy and health technology platform 1mg. According to a recent report by the Economic Times, the Tata Group is also in talks to acquire health and fitness startup Curefit.  

BigBasket, the statement added, is currently present in over 30 cities and offers a grocery assortment of more than 50,000 SKUs, fulfilling over 15 million customer orders per month. It also operates a farm-to-fork supply chain with a network of over 12,000 farmers.   

The grocery delivery startup was valued at $1.2 billion in October 2019, according to an auditor’s report, when it acquired hyperlocal grocery delivery platform DailyNinja. In April last year, it raised around $60 million in a bridge round of funding led by Alibaba.