Tata group is set to embark on a billion-dollar capital raise for two of its prime digital assets, BigBasket and 1mg, as it gears up to capitalise on these businesses and catch up with the competition, said multiple people involved.
The salt-to-software conglomerate has mandated global investment banks Citi and Moelis to help raise $1.3 billion from external investors. Of this, $1 billion has been earmarked for BigBasket, known for scheduled and slotted grocery deliveries and forced to pivot to quick commerce after resisting the shift. The residual $300 million will be for online pharmacy 1mg, said the people mentioned above. Both units come under the Tata Digital umbrella.
Group holding company Tata Sons made clear its displeasure over BigBasket lagging behind rivals Blinkit and Zepto during a business review earlier this year, ET was first to report February 19.
The fundraising process is expected to start by the end of this month. Feelers are going out to Canadian pension funds and Asian sovereign and investment funds such as Temasek that don’t have potentially conflicting interests in rival retailers.
Tata Sons has invested over $2 billion in the Neu superapp till date, but its performance hasn’t met expectations.
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Tata Sons chairman N Chandrasekaran has been reportedly seeking accountability, having made it clear that businesses must show profit and the funding tap won’t be forever open, said those in the know.
BigBasket contributes the lion's share of Tata Digital’s revenue, which doubled to ₹420.5 crore in FY24, compared with the previous fiscal. Figures for FY25 aren’t available yet.
“Tata Sons has invested significant funds till date into Tata Digital’s various businesses, and it feels it’s time to show results,” said a top official privy to the matter.
“While businesses like BigBasket are seen as mature enough to drive growth based on market realities, it has to move swiftly in spaces ignored earlier, and that needs big funds. Investors may not be too confident about the valuation expected by the management. Their comfort comes from the fact that it has the backing of Tata Sons.”
Although some investors are understood to be seeking an exit, a BigBasket initial public offering is unlikely immediately and would need adequate preparation, the person said.
Tata Sons and Tata Digital did not respond to ET’s queries.
Tata group owns over 65% of BigBasket, while Mirae Asset VC and the UK’s CDC Group are among other investors. The Bengaluru-based firm was last valued at $3.2 billion. Tata Digital owns approximately 63% of Tata 1mg, with other investors including Sequoia Capital, Intel Capital, Omidyar Network, and the Bill & Melinda Gates Foundation. It was valued at $1.25 billion during its previous funding round in 2022. The platform, which also offers diagnostics and other healthcare services, plans to invest in strengthening its physical presence as well as quick delivery.
The company, which came into the Tata fold after its takeover in June 2021, delivers orders in four to five hours in select locations, including Delhi-NCR. It also has an express delivery option, promising 30-minute delivery for certain products.
While quick commerce accounts for nearly 80% of BigBasket’s orders, the platform has only a 10% share of that market, which is dominated by Blinkit, Zepto and others. BigBasket is aiming to become the overarching quick commerce platform for multiple Tata Neu categories. It has announced its decision to consolidate services by merging its BBdaily subscription service into the main BigBasket app. “Over 95% of BigBasket’s total operating revenue in FY24 was from groceries,” said a group executive on condition of anonymity. BB Now, BigBasket’s quick commerce offering, is now getting repositioned as a multi-category player and is being integrated with Croma, 1mg, Carat Lane and Zudio, among others — the Tata stores for electronics, jewellery and fashion.
The integration and rollout has already begun.
The salt-to-software conglomerate has mandated global investment banks Citi and Moelis to help raise $1.3 billion from external investors. Of this, $1 billion has been earmarked for BigBasket, known for scheduled and slotted grocery deliveries and forced to pivot to quick commerce after resisting the shift. The residual $300 million will be for online pharmacy 1mg, said the people mentioned above. Both units come under the Tata Digital umbrella.
Group holding company Tata Sons made clear its displeasure over BigBasket lagging behind rivals Blinkit and Zepto during a business review earlier this year, ET was first to report February 19.
The fundraising process is expected to start by the end of this month. Feelers are going out to Canadian pension funds and Asian sovereign and investment funds such as Temasek that don’t have potentially conflicting interests in rival retailers.
Tata Sons has invested over $2 billion in the Neu superapp till date, but its performance hasn’t met expectations.
More of Quick Commerce
Tata Sons chairman N Chandrasekaran has been reportedly seeking accountability, having made it clear that businesses must show profit and the funding tap won’t be forever open, said those in the know.
BigBasket contributes the lion's share of Tata Digital’s revenue, which doubled to ₹420.5 crore in FY24, compared with the previous fiscal. Figures for FY25 aren’t available yet.
“Tata Sons has invested significant funds till date into Tata Digital’s various businesses, and it feels it’s time to show results,” said a top official privy to the matter.
“While businesses like BigBasket are seen as mature enough to drive growth based on market realities, it has to move swiftly in spaces ignored earlier, and that needs big funds. Investors may not be too confident about the valuation expected by the management. Their comfort comes from the fact that it has the backing of Tata Sons.”
Although some investors are understood to be seeking an exit, a BigBasket initial public offering is unlikely immediately and would need adequate preparation, the person said.
Tata Sons and Tata Digital did not respond to ET’s queries.
Tata group owns over 65% of BigBasket, while Mirae Asset VC and the UK’s CDC Group are among other investors. The Bengaluru-based firm was last valued at $3.2 billion. Tata Digital owns approximately 63% of Tata 1mg, with other investors including Sequoia Capital, Intel Capital, Omidyar Network, and the Bill & Melinda Gates Foundation. It was valued at $1.25 billion during its previous funding round in 2022. The platform, which also offers diagnostics and other healthcare services, plans to invest in strengthening its physical presence as well as quick delivery.
The company, which came into the Tata fold after its takeover in June 2021, delivers orders in four to five hours in select locations, including Delhi-NCR. It also has an express delivery option, promising 30-minute delivery for certain products.
While quick commerce accounts for nearly 80% of BigBasket’s orders, the platform has only a 10% share of that market, which is dominated by Blinkit, Zepto and others. BigBasket is aiming to become the overarching quick commerce platform for multiple Tata Neu categories. It has announced its decision to consolidate services by merging its BBdaily subscription service into the main BigBasket app. “Over 95% of BigBasket’s total operating revenue in FY24 was from groceries,” said a group executive on condition of anonymity. BB Now, BigBasket’s quick commerce offering, is now getting repositioned as a multi-category player and is being integrated with Croma, 1mg, Carat Lane and Zudio, among others — the Tata stores for electronics, jewellery and fashion.
The integration and rollout has already begun.
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