The Tata Group and Big Basket have formally signed on the dotted line, finalising a $1.2 billion deal giving the former 60-63% stake in the e-grocer.
The transaction, which is a mix of a primary and secondary sale of shares, will provide a full exit to two of BigBasket’s biggest investors, Chinese ecommerce giant Alibaba and scandal-hit private equity firm Abraaj Group. The transaction will see a $200-250 million primary cash infusion in BigBasket by Tata Group, as part of its larger deal to acquire a majority stake in the country’s largest online grocery company.
Both sides are awaiting regulatory clearances, especially from the Competition Commission of India, officials said.
Tata Group plans to take BigBasket public by 2022 as part of the deal terms.
“A formal announcement will take some time,” a group official said. Both sides have refrained from commenting on the closure of the deal.
The transaction is seen as one of the largest merger and acquisition deals in the digital economy. BigBasket’s last-round valuation was $1.2 billion.
While Alibaba holds a 27.58% stake in the company, Abraaj owns about 18.05%, according to data from business intelligence platform Paper.vc. Acquiring the stakes of just these two investors will give Tata Group close to the majority stake it’s seeking in BigBasket.
The transaction may provide partial exits to smaller investors.
The Tata Group will hold the right of first refusal on any such stake sale by other investors. BigBasket CEO Hari Menon said recently that an IPO would help investors exit, without elaborating.
In September last year, Big-Basket said that the number of new customers on its platform had increased by 84% from pre-Covid levels and that retention rates had risen to 50% from 30-45% earlier. The company also said it was processing more than 20 million orders per month and had hit a run-rate of $1 billion in annual revenue.
Tata Group is also close to finalising a secondary transaction of $200-250 million to acquire a 55% stake in online pharmacy 1mg.