Tata Group may acquire BigBasket: Details here
What's the story
Tata Group has reportedly reached an agreement to acquire a majority stake in BigBasket according to unnamed sources privy to the deal.
The popular grocery delivery start-up is offering 68 percent stake to the Indian conglomerate. To put that into perspective, the company is valued at anywhere between $1.8 to $2 billion.
BigBasket had already raised $750 million prior to this deal.
Tainted money?
Tata acquisition will rid BigBasket of Chinese investment
The rumored deal also provides the start-up with much needed relief from Alibaba's grip with its 30 percent stake in the company. This has been a matter of concern on account of the government's increasingly tough stance on Chinese investments in Indian companies.
Tata's purchase of stake in the company will allow the Chinese internet entity to cleanly sever its ties.
All but confirmed
Tata Group seeks CCI approval for BigBasket acquisition
Sources privy to the matter have revealed that BigBasket could also be looking at a public market listing as a part of the deal. This is expected to happen as early as next year.
However, officials from Tata Group and BigBasket have refused to confirm or deny the rumors. Meanwhile, it has already sought approval from the Competition Commission of India for the deal.
Moving quick
The acquisition could take place within five weeks
The deal is expected to go through within the next five weeks. The idea, according to unnamed sources, is to give existing investors Alibaba, Abraaj Group, and IFC plenty of time to make an exit.
BigBasket's top management and co-founder-cum-CEO Hari Menon will be retained on the company's board. Evidently, the acquisition would allow Tata Group to transition into the digital retail space.
Grocery wars
Tata Group will face stiff competition from Reliance's JioMart
Although Big Basket consolidated its position as the market leader by pushing $1 billion worth of merchandise through 300,000 daily orders, it faces stiff competition from Reliance Retail's JioMart.
Mukesh Ambani is serious about competing in this relatively unexplored sector and has plans to consolidate the unorganized retail space by bringing "millions of small businesses and the customers they serve" into the e-commerce market.