Alibaba, along with Paytm Mall, is ready to buy a 35–40% stake in a grocery delivery startup BigBasket against an investment of $300 million. The deal will give BigBasket a total valuation of $850 million. There will be a primary investment of about $220 million, with $80 million used to obtain shares from remaining investors.
BigBasket is from Bangalore, and the startup had already requested investment from e-commerce’s biggest player Amazon, but they have already acquired U.S. grocer Whole Foods.
This deal results in the departure of chief stakeholders in BigBasket. These are K Ganesh and Meena Ganesh’s GrowthStory and investment firms Ascent Capital, Zodius Capital, and Helion Venture Partners.
BigBasket co-founders Hari Menon, Vipul Parekh, Abhinay Chaudhary, and VS Sudhakar have also shown interest in trading their shares.
The grocer has always been considered a thought-provoking business, even in progressive marketplaces like the U.S. and China. BigBasket, run by Innovative Retail Concepts Pvt, works in a country where growth is tough outside the major cities because of undeveloped logistics and a scarcity of cooled vans and storerooms.
This area of business needs lots of investment outlays, and Amazon has already received government sanctions to devote $500 million into food trade. But, as history suggests many high-profile grocery startups have failed in the last couple of years in India.
Nonetheless, online venders can push high-margin private labels and fresh produce to buyers in the e-commerce sector.
BigBasket is also doing good promotions by featuring Bollywood actor Shahrukh Khan shopping for a home and endorsing in Hindi “Main ek Bigbasket-eer hoon, aur aap?” (I’m a Bigbasket-eer, and you?). The company delivers in more than two dozen Indian cities and offers 18,000 products from over 1,000 brands. Its prevailing supporters embrace the Dubai-based Abraaj Group, as well as Sands Capital.