The Tata group has initiated final talks to acquire 80 per cent stake in online grocery platform BigBasket. The Tata-BigBasket deal could be sealed for around $1.3 billion at a $1.6 billion valuation. As per the contours of the deal, the Tata group could buy 50-60 per cent stake from the existing BigBasket investors like Alibaba and few others and pump in more money to buy additional 20-30 per cent stake in the company. The formal decision on the deal could be announced this month only.
Tatas could pay around $500-700 million in cash to buy out stakes from Alibaba group and other private equity funds. Investors have reportedly no objections to Tatas buying out their stakes but want the current founders-led top management on board. They also want to proceed with IPO launch in the coming years.
The deal suits well for both Tatas and BigBasket. BigBasket has big plans when it comes to expanding its business in India. The start-up is aiming to launch an initial public offering in the next two years. Right now, BigBasket holds the biggest share of 50 per cent in the e-grocery segment. It sells over 18,000 products and 1,000 brands on its platform.
The Tata group, on the other hand, has a huge presence in offline as well as FMCG retail stores. The company's online retail venture, Tata CLiQ, which started in 2016 is far behind top three rivals Reliance Retail, Amazon and Flipkart. BigBasket could give it a boost to pose a challenge to the big three.
Market analysts suggest BigBasket deal could help Tatas in conceptualising its proposed 'Super App', which is touted to be one stop destination for all kinds of products and services.
The app is expected to be launched in India in December or January. The app aims to provide its customers with a range of products and services offered by different platforms of Tata Group, including shopping app Tata CLiQ, grocery e-store StarQuick and online electronics platform Croma.