The acquisition of BigBasket by Tata Group could now be concluded without any hiccups. The CCI has finally greenlighted Tata Son’s proposal to acquire a majority stake in the homegrown e-grocer startup BigBasket!
Tata Digital, one of Tata Sons wholly-owned subsidiaries, had sought the approval of the Competition Commission of India to acquire a 64.3% stake in BigBasket – the Alibaba-backed online supermarket grocery supplier.
Tata Digital, a wholly-owned subsidiary of Tata Sons, had sought CCI’s approval to acquire a 64.3% stake in Supermarket Grocery Supplies Pvt Ltd, the business-to-business arm of BigBasket, through a mix of primary and secondary share purchases.
In February, it was revealed that Tata Group agreed to pay a whopping $1.2 billion to acquire the majority stake in BigBasket, out of which $200-$250 million would be a primary cash infusion into the online grocery firm.
According to the latest media reports, Tata Digital is very likely to buy out Alibaba entirely, which holds a 27.58% stake and Actis LLP, which holds an 18.05% stake in BigBasket. Other than these two players, some smaller investors in the e-grocer are also expected to get an exit.
Note here that the fruition of the deal puts Tata Group in immediate direct competition with Reliance’s Jio Mart, Amazon, Walmart-owned Flipkart and Grofers, which SoftBank’s Vision Fund backs.
Currently, BigBasket is leading the Indian online grocery space and has claimed to have crossed that its annual revenue run rate has crossed whopping $1 billion. Compared to that, the online grocery businesses of Amazon and Flipkart, despite having more reach, still need to go a long way to rival the sales numbers of BigBasket.
As per RedSeer Consulting, a market research firm, India’s grocery market was valued at over $600 billion in 2019 and has the potential to grow over $850 billion within the next four years. That being said, the majority of this market is still controlled by unorganised Kirana, retail players, a problem JioMart is solving effectively.
The online grocery segment has been on an accelerated growth path, all thanks to the COVID-19 pandemic, which restricted consumers to their homes and forced them to adopt online ordering of groceries and other essentials.
RedSeer estimates that the online grocery segment will capture 3% of all grocery spends in India by the year 2025, which makes it a humongous $24 billion opportunity.
Even during the second phase of the pandemic wherein, several states have once again imposed strict lockdowns, the online grocery segment is observing a surge in consumer demand who wish to get their essentials delivered to their doorstep without having them to sacrifice their safety by stepping out.
Thus, all in all, it is well understood that Tata Group has sounded the war bugle with the acquisition of Bigbasket. It now remains to be seen if they will be able to beat the other bigwig rivals in the space successfully. We will keep you updated on all future developments. Until then, stay tuned.
