Tata Group to buy 68% stake in BigBasket for over $1 billion: Report

Tata group will buy a 68% stake in Alibaba-backed online grocery startup Bigbasket. The transaction will complete for about Rs 9,500 crore ($1.31 billion). The will translate into an enterprise value of Rs 13,500 crore for Bigbasket. Apparently, ET has been reporting the development for over a month now.

Currently, Jack Ma's Alibaba held the largest stake (27.58%) in the company. Further, Abraaj Group holds the second-largest external stake (18.05%) in the company. The acquisition will provide an exit option to Alibaba and a few other investors. The acquisition will further help Tata to establish a presence in the Indian eCommerce market. Presently, Amazon, Flipkart and Reliance Group are the leaders in the eCommerce segment in India. The deal will, thus, help Tata gain a big user base to cross-sell its home products. It also helps it inch closer to the plan of providing a super app in India.

Tata Group and Bigbasket have denied comments on the matter.

A thrust to IPO Plans?

Founders Vipul Parekh, Hari Menon, Abhinay Choudhari, Ramesh VS and VS Sudhakar own a very small portion of the startup. For the founders, Tata's backing will give it the “necessary firepower to take on Reliance Industries Ltd, which aims to shake up the e-commerce market with deep discounts just as it did in telecom.”

Further, they have been planning for an IPO in 2022. Currently, the startup values at $1.2 billion. Reportedly, the deal also has terms that include a plan to take BigBasket public by 2022-23. Thereby, it will give a significant boost to investors who remain. Further, the Tata Group will also reportedly hold the right of first refusal on any such stake sale by other investors.

The deal has to be one of the largest mergers and acquisitions deals in Indian eCommerce space; not just for Bigbasket, but also for Tata.