Online grocer BigBasket, which is in talks with the Tata Group to sell a majority stake in the company according to reports could be doing this as they might not have a proper visibility in terms of investments from large investors, say experts.
“The competition which BigBasket faces now is with the big three -- Amazon, Walmart and Reliance. If BigBasket’s biggest investors want to bet on them, they will have to write a big cheque. A $10-15 million cheque will not help the company,” said Satish Meena, Senior Forecast Analyst at Forrester Research.
Hence, BigBasket is looking at someone with whom they can partner or at strategic investors like Tata who can top up the investment further, he explained.
According to reports, the Bengaluru-based online grocer is in talks with the salt-to-software conglomerate to sell around 50 per cent of its stake in the company for around $1 billion with China’s Alibaba, which is the largest investor in the company, looking for an exit.
BigBasket also fits the criteria for the Tata Group which is now looking at something in retail to go omnichannel because they realise that pureplay running the store is not going to help them in the long run. “So it will be a good deal for both of them if it happens,” said Meena.
“We keep talking to several firms but nothing has been firmed up. Our e-commerce play will be really big and we’ll not contend with a minor stake in any company,” a Tata Group spokesperson had earlier said in response to a potential stake purchase in BigBasket.
Earlier reports had also suggested that the Mumbai headquartered conglomerate was also in talks with Snapdeal and IndiaMart to buy stake in the companies to strengthen its online presence.
“For them to have serious play online, inorganic is the quickest route. So buying a majority stake in a player like BigBasket makes sense,” said Devangshu Dutta, Chief Executive of Third Eyesight.
In August, Tata Sons Chairman N Chandrasekaran had also made it public that the group was building a super app that would go live in December. The group’s holding company is overseeing the project, with inputs coming from consumer-facing businesses, including Trent, Croma, and Tata Cliq, among others.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU