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Competition Commission approves BigBasket’s 64% stake sale to Tata Digital

bigbasket

The Competition Commission of India (CCI) has approved Tata Sons’ offer to obtain a majority stake in BigBasket, gearing up for a clash of the leaders in India’s fast-growing online grocery segment.

Tata Digital had asked for CCI’s approval to acquire a 64.3% stake in Supermarket Grocery Supplies, the B2B arm of BigBasket, via a mix of primary and secondary share purchases.

Consequently, via a separate transaction, Supermarket Grocery Supplies may take sole control over Innovative Retail Concepts which operates BigBasket’s online retail business, giving Tata control over both wholesale and retail business units.

Tata Digital is expected to buy out Alibaba, which holds a 27.58% stake, and Actis LLP, which acquired several portfolios of scandal-hit Abraaj Group and owns an 18.05% stake in BigBasket. Some other smaller investors in the online grocery startup are also likely to get an exit.

The deal could also include a plan to take BigBasket public by 2022-23, giving investors who remain an upside shortly.

The transaction will put Tata in direct competition with Reliance’s Jio Mart, Amazon, and Walmart-owned Flipkart, besides SoftBank Vision Fund-backed Grofers.

Currently, BigBasket leading the online grocery segment and claims to have crossed the $1 billion annual revenue run rate. While Amazon and Flipkart are far larger in terms of reach in India, their online grocery businesses still make up a very small part of sales despite them making collective efforts to grow in the segment for the last two years.

As per market researcher RedSeer Consulting, the Indian grocery market was over $600 billion in 2019 and has the potential to grow to over $850 billion by 2025. However, the bulk of this market is still dominated by unorganized retailers, mostly kiranas, offering a huge opportunity for growth for organized players.

Even during the second wave of Covid-19 that is pushing many states to reintroduce stringent lockdown-like curbs, the online grocery segment is witnessing a hike as consumers prefer to shop from the safety of their homes. BigBasket has said that it is currently recording 23-25% higher sales in April than the previous month.

The latest development would help BigBasket to get ahead of its competitors and expand its business.

Shishir Gupta, Founder and CEO, StartupLanes

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