Grocery e-tailer BigBasket is closing a new $150-million round that will catapult its pre-money valuation to $1 billion, said four people familiar with the deal details.
Existing backer Alibaba is leading the latest fund raise, while new investors UK government-owned CDC Group and South Korea’s Mirae Asset Global Investments are also participating, sources familiar with the transactions said. Alibaba is expected to pump in $50 million, sources in the know said.
Global private equity major CDC is known for its impact investments across developing markets such as Africa and South Asia. It had bet on Jabong — the online fashion retailer bought out by Flipkart-Myntra in 2014 — in its only other Indian ecommerce investment. CDC is also a limited partner in early-stage venture capital firms, including pi Ventures and Stellaris.
“For CDC, an investment in BigBasket would make sense, as they have a developmental angle through the farming and sourcing the company does to procure products. There is a possibility that CDC may buy a chunk of secondary shares as well, from existing shareholders,” said a person familiar with the details.
Mirae, which has set aside $1 billion to back startups across Asia, has recently closed investments in Zolo Stays, a co-living platform.
ET got no replies to its email seeking comments from BigBasket co-founder and chief executive Hari Menon, Alibaba, Mirae and CDC, as of press time Thursday.
In February 2018, BigBasket operator Supermarket Grocery Supplies closed a $200-million round led by the Alibaba Group. There was also a $100-million secondary component in the deal. Currently, Alibaba holds about 24% in BigBasket, with Ascent Capital at 15.5%, Abraaj Group at 16.2% and founders and promoters holding 11% stake.
Due diligence for the fresh funding is ongoing and likely to close in a month, said another person privy to the matter.
“This round gives BigBasket firepower to be aggressive and maintain market leadership against Amazon, Flipkart and Grofers. It allows BigBasket to venture into new cities and categories such as micro-delivery,” said another person directly aware of fundraising plans.
The changed foreign direct investment (FDI) framework has affected Amazon and Flipkart, both of which were aggressively pursuing grocery etail in India. Grofers was in talks to raise $120 million from Softbank’s Vision Fund, as reported by ET in its October 29, 2018, edition.
The high repeat and habit-forming nature of the grocery business is a big attraction but both Amazon and Flipkart have had to launch categories that require a controlled inventory model.
BigBasket’s differentiation lies in its private label brands and supply chain integration for fresh fruits, vegetables and meats, which others struggle to fulfill due to deep reliance on kirana stores. The company — with B2C and B2B presence — has set up several dark stores to cater to one-hour express delivery service for select items, covering both planned and unplanned grocery needs.
For fiscal 2018, BigBasket’s revenue went up 35% to Rs 1,605 crore, while losses narrowed by 60% to Rs 272 crore, according to regulatory filings. Over the last few months, BigBasket has introduced categories such as beauty, kitchen and home essentials, as well as a subscription programme called BBStar.
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