The Competition Commission of India (CCI) on Wednesday said it has approved Tata Digital’s proposal to acquire a majority stake in Supermarket Grocery Supplies (SGS), the parent company and B2B operator of e-grocer BigBasket.
According to the proposal, Tata Digital will acquire up to 64.3% in SGS through a combination of primary and secondary transactions.
Subsequently, SGS may acquire sole control of Innovative Retail Concepts, which runs the consumer-facing business of BigBasket, under license from SGS. The deal will give Tata Digital control of BigBasket’s retail and B2B business arms.
Tata Digital is a wholly owned subsidiary of Tata Sons, which is the ultimate holding company of entities under the Tata Sons group.
The deal will reportedly result in an enterprise value of Rs 13,500 crore or $1.8 billion for BigBasket.
The grocery delivery startup was valued at $1.2 billion in October 2019, according to an auditor’s report, when it acquired hyperlocal grocery delivery platform DailyNinja.
In April last year, it raised around $60 million in a bridge round of funding led by Alibaba.
For the financial year 2019-20, SGS reported consolidated net sales of Rs 3,794 crore, and losses of Rs 611 crore, as per VCCEdge data.
The latest deal is also expected to create an exit for BigBasket’s largest shareholder and Chinese internet company Alibaba E-commerce, which held a 16.45% stake in the company as of FY20, as well as Abraaj Group, which held a 15.02% stake during the period.
The acquisition of the Bengaluru based startup, which competes with giants Flipkart and Amazon, would tie into the conglomerate’s strategy of launching a super app for the group’s consumer-facing businesses.
Last week, Tata Digital committed to invest nearly Rs 100 crore in epharmacy and health technology platform 1mg. The Gurugram based startup received 25% of the amount, while Rs 75 crore is to be paid according to terms of the Class 7 CCD issued. According to several media reports, Tata Group is expected to acquire a majority stake in 1MG.
These acquisitions are expected to strengthen Tata’s proposed ecommerce play across retail, grocery, epharmacy and other sectors. It will also help the group take on Amazon, Reliance Industries, and Walmart-owned Flipkart in India's booming ecommerce market.