BigBasket in talks with new investors for $350-400 million funding as Alibaba looks to cut its stake – ETtech

Mumbai/Bengaluru: Online grocery retailer BigBasket is in discussions to rope in a bunch of new investors like Singapore government’s Temasek, US-based Generation Partners, Fidelity and Tybourne Capital, for a $350-400 million financing round, two people in the know said. The ongoing talks also include at least $100-150 million in secondary sale of shares by early investors, said people close to the matter, who did not want to be identified as the talks are private. Other existing investors like

BigBasket, which has gained traction on the back of the Covid-19 pandemic as consumers purchase groceries and everyday essential online, is likely to see its valuation go up about 33% to around $2 billion, post the investment, another person privy to the details said.

“The non-binding term sheets are in and the round is likely to close in a month’s time. Alibaba’s not participating, which means the company is looking to diversify its list of investors by getting new backers in,” said one of the people cited earlier in the report. Other existing investors in BigBasket including Mirae Asset-Naver Asia Growth Fund, UK government-owned CDC Group, are also expected to participate in the funding, said a source who did not want to named as the deal is not final yet.

A non-binding term sheet outlines the basic contours of a deal, signalling an intent to invest at set terms post legal, financial and business diligence. Alibaba, which is a significant investor in the Bengaluru-based company with an around 28% stake, is not pumping any new capital in the e-grocer amid a larger anti-China sentiment and FDI restrictions enforced by the Indian government, which have affected Chinese money coming into domestic firms. A source said Alibaba would be cutting its shareholding to 20% post this financing round.

Emailed queries to Temasek, Generation Partners and Tybourne Capital did not elicit any response until press time Monday, while BigBasket chief executive Hari Menon did not offer a comment. A spokesperson for Fidelity said, “We do not comment on individual companies. So, we won’t be able to help with this request.”

News portal Entrackr reported on Monday that BigBasket was in discussions to pick up $100 million from Temasek.

Also Read: India’s online grocery market may clock $3 billion sales in 2020

BigBasket in talks with new investors for $350-400 million funding as Alibaba looks to cut its stake
BigBasket’s fundraising process kicked off earlier this year and coincided with Reliance Industries announcing its intent to push grocery ecommerce via JioMart. Reliance’s Jio Platforms also went on to rack up about $15 billion from investors like Facebook, Google and Silver Lake, and is now shoring up funds for Reliance Retail. The emphasis on grocery etailing as a key category for Reliance Retail has worked against players like BigBasket as they went out to mop up fresh funds, multiple investors said.

In April, BigBasket had raised $50 million in a bridge round at a valuation of $1.2 billion from the Alibaba Group. A bridge round is when companies pick up a smaller amount of capital in anticipation of a larger cheque coming in. “With significant investments in their private label brands and a spike in order volumes, brought in by the lockdown … they (BigBasket) are likely to turn profitable by the end of this year,” said a person directly in the know.

BigBasket’s differentiator against its peers in a highly competitive grocery market lies in the 30,000-plus items that it sells as well as its direct-to-home supply chain integration. In April, at the start of the Covid-19 led lockdown, BigBasket fulfilled 160,000 orders daily, while its closest rival Grofers’ numbers stood at around 90,000. The base of consumers has steadily grown since then, with the retailer clocking Rs 750-900 crore in monthly sales. The company is expected to close this fiscal year with about Rs 9,000 crore in gross sales.

In an interaction with ET earlier this month, BigBasket’s CEO, Menon, said the company saw a threefold increase in orders from new customers compared with pre-Covid 19 levels. “Our retention of new customer cohorts increased 60%, which is a significant jump. We are retaining new customers acquired even as unlock happens across all our cities,” Menon said at the time. Over the last 18 months, the etailer has launched morning subscription-based deliveries — BB-Instant, vending machines and on-demand deliveries. It has also expanded into beauty, milk and fresh meats, along with a slew of private brands, while in parallel running an accelerator for emerging brands.



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