Tata Group to Acquire Majority Stake in BigBasket

The Tata Group, a prominent Indian conglomerate, has reportedly reached an agreement to secure a controlling interest in BigBasket, a leading grocery delivery startup. This information was disclosed by two sources with knowledge of the ongoing negotiations, as reported by TechCrunch.

Deal Valuation and Stake Acquisition

The transaction will see the Tata Group acquire over 60% of BigBasket, valuing the Indian startup between $1.8 billion and $2 billion. Sources requested anonymity due to the confidential nature of the deal. Prior to this acquisition, BigBasket had successfully raised over $750 million in funding.

Investor Exit

As part of this agreement, several existing investors, including Chinese internet giant Alibaba – which holds approximately 30% of BigBasket – and the Abraaj Group, are poised for a near-complete exit. Recent restrictions imposed by New Delhi on Chinese investment in Indian companies have contributed to this shift.

Potential IPO

According to one source, BigBasket is considering a public listing as early as next year. Neither BigBasket’s co-founders nor representatives from the Tata Group have yet responded to requests for comment regarding this matter.

Previous Reporting

Reports of advanced discussions between the two companies surfaced on Tuesday, as initially highlighted by ET Now, with initial signals appearing in local media outlets approximately two quarters ago.

Tata Group's Expansion Strategy

This move aligns with the Mumbai-based Tata Group’s broader strategy to expand its presence in consumer-facing businesses. The group, which generated $113 billion in revenue in 2019 and owns well-known brands like Jaguar Land Rover and Tetley, is also actively developing a comprehensive “super app” for the Indian market – the world’s second-largest internet user base.

BigBasket's Market Position

Headquartered in Bangalore, BigBasket competes directly with Grofers (backed by SoftBank) and JioMart (Reliance’s venture). The company currently operates in over two dozen Indian cities and achieved profitability during the surge in demand experienced during the coronavirus pandemic. Furthermore, BigBasket has successfully expanded its portfolio of private-label products, enhancing its profit margins.

Market Growth and Competition

Analysts at Citi Bank estimate that BigBasket and Grofers experienced user base growth of up to 80% last year. However, JioMart, led by India’s wealthiest individual, Mukesh Ambani, is rapidly emerging as a significant competitor.

Market Size Projection

A recent analysis by Bank of America projects the Indian online grocery delivery market to reach a value of $12 billion by 2023.

Competitive Landscape

“The sector is characterized by intense competition, with both vertically focused players like BigBasket and Grofers, and horizontal platforms such as Amazon and Flipkart, striving to organize the traditionally fragmented market,” analysts noted. “BigBasket previously held the leading position, achieving $1 billion in annualized GMV and processing over 300,000 orders daily.”

Reliance's Impact and Tata's Response

The expansion of Reliance Industries into the e-commerce sector last year, with the launch of its JioMart app across 200 cities, may have spurred the Tata Group to accelerate its own digital initiatives. Ambani secured over $26 billion in investment for his Jio Platforms and Reliance Retail ventures from prominent investors including Facebook and Google.

Past Digital Plans

The Information reported in December that the Tata Group had initially begun exploring expansion into various consumer-facing digital services as early as 2016, but these plans were temporarily halted following a change in leadership.