FT report: Tatas may buy a stake in BigBasket

Tata Group is in talks to tie up with Indian online groceries unicorn Big Basket, as the conglomerate attempts to catch up with rivals, including Amazon and Mukesh Ambani’s rapidly expanding retail empire, the Financial Times reported on Wednesday.

Tata and Big Basket would make a decision on the deal by the end of October, FT reported, citing a person close to discussions. The newspaper wrote that another person with knowledge of the potential deal described it as a “strategic” relationship, with the conglomerate potentially acquiring a 20% stake and two board seats.

The Bengaluru-heaquartered Big Basket has a pan-India presence. It is believed to be negotiating a fresh round of funding with new investors, of $400 million and the backing of the Tatas woud be timely.

A transaction with BigBasket could help the Tata Group tap into a growing e-grocery market as it is preparing for a big online push. In August, Natarajan Chandrasekaran, chairman at Tata Sons, told Financial Times that the Tata Group is planning to launch a super app that will host all its consumer offerings on a single platform. “It will be a super app, a lot of apps in apps and so on,” Chandrasekaran had said.

Analysts at consulting firm RedSeer estimate the gross merchandise value (GMV) of e-grocers will touch over $3 billion this year as more customers have signed up for online grocery services amid the pandemic. E-grocers collectively reported a GMV of $1.9 billion in 2019.

Last month, BigBasket had said the number of new customers on its platform increased by as much as 84% compared with the pre-Covid levels, while the retention rate grew by 50% against the earlier 30-45%. The e-grocer’s valuation touched $1.2 billion after it raised a fresh $150 million in March 2019 from a clutch of investors.