Tata Digital seeks additional cash from holding company Tata Sons to fuel its ambitious growth plans, one of its biggest assets, egrocer BigBasket has seen a jump in its valuation following a secondary share sale at $2.7 billion (earlier this year). Brand Capital–the strategic investment arm of the Times Group, which also publishes this paper, has part sold its stake in the firm to Tata Digital, people briefed on the matter said.
Existing investors–Tata Digital and others–are internally valuing the firm at between $4 to 5 billion on the basis of its gross sales and projected annual growth in the coming years, these people said, adding the growth plans were discussed at BigBasket’s recent board meeting in February .
“We are delighted to be able to support BigBasket’s amazing growth since their early days. BigBasket serves millions of Indians daily and played a mission critical role during the pandemic lockdowns, in particular. We will continue to be their trusted partner as they grow and scale new heights within the Tata Group” said Sam Subramaniam, CEO, Brand Capital, referring to the recent secondary share sale.
BigBasket cofounder and CEO Hari Menon declined to comment while an email sent to a spokesperson of Tata Digital didn’t elicit a response.
“Given the strong growth BigBasket is planned for, its valuation is much higher than the recent secondary share sale. The company has projected an annual growth of at least 40% in its gross sale in the next couple of years,” a person briefed on the matter said.
In May last year,
Tata Digital had acquired a majority stake in the Bengaluru-based online grocery firmat a valuation of around $1.8 billion. Soon after, it pumped in around $200 million in the firm valuing it at $2 billion, ET reported on May 28 last year.
Discover the stories of your interest
The steep rise in BigBasket’s valuation comes at a time when its parent
Tata Digital has held early-stage discussions with marquee global investors to raise new capitalfor its ecommerce venture.
ET reported on March 9 that global investors are yet to commit new capital to Tata Digital and are waiting for the much-hyped Tata Neu superapp to be launched. It is unlikely this will happen in March, sources added.
For its part, BigBasket is said to be closing the current financial year with gross sales of $1.3 billion. In the previous financial year, it became the second vertical ecommerce player to have clocked actual gross sales of $ 1 billion (Rs 7,800 crore).
Sources aware of BigBasket’s current plans said its entry into quick commerce with BB Now is also expected to further shore up gross sales. The pandemic helped BigBasket gain new consumers faster while existing users shopped more.
“The quick commerce or 15-30 minutes delivery space is competitive but BigBasket would have its advantage of existing network of warehouses and it is expanding its dark store network,” one of the people mentioned above said. BB Now has been launched in select parts of Bengaluru already and is being gradually made available to a wider range of pincodes.
“We have gone deep into three-four hour deliveries, in fact in most cases it’s two-three hours. Now, it’s (hourly delivery) is what we are going to do next,” Menon said. “This time it’s very clear—thanks to our experience, the focus is on setting up dark stores, bringing inventory and warehouse closer to the customer and making sure the cold chain works better and faster and fresh produce can be delivered with ease,” Menon had told ET in July last year.
Meanwhile, ET has also reported the critical role BigBasket is playing for Tata Digital where it will power a unified supply chain for all the brands on Tata Neu. Menon also told ET in November that the firm is working on bringing all its grocery offerings in its main BigBasket app, which is being referred internally as the ‘BB Super App’. This also included bringing its subscription-based essentials delivery service-BB Daily, onto the main app, he had said at the time.
