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    Tuesday, September 27, 2022

    BigBasket to Raise $200 Million at Up to $3.5 Billion Valuation

    Online grocer BigBasket has begun the process for a new round of funding that is likely to value the Tata Digital-owned firm at around $3-3.5 billion, said three people briefed on the matter.

    BigBasket's latest financing is likely to come from Tata Digital and existing shareholders. While the size of the round hasn’t been finalised, it’s likely to be in the range of $200 million or more, the people said.

    Bengaluru-based BigBasket's holding company Supermarket Grocery, of which Tata owns 62%, filed documents with the Registrar of Companies (RoC) recently about plans to increase the authorised share capital of the firm, typically an indication of a fresh cash infusion on the cards.

    BigBasket was valued at $2.7 billion in a secondary transaction where Brand Capital — the strategic investment arm of the Times Group, which also publishes this paper — offloaded part of its stake in the firm. BigBasket’s last primary transaction valuation was $2 billion in May last year, soon after Tata Digital’s majority acquisition of the company.

    Company growing at 40% annually

    “After 1mg (which got $41 million in funding), BigBasket is also working on a new cash infusion. It will happen at a pre-money valuation of around $3.2-3.3 billion,” said one of the people mentioned above. Epharmacy 1mg turned a unicorn earlier this month, ET reported.

    For BigBasket, the estimated bump up in valuation will be around 75% compared with the last primary cash infusion in the company.

    Tata Digital and BigBasket CEO Hari Menon didn’t respond to queries.

    The infusion comes as BigBasket has been expanding core offerings steadily while venturing into quick commerce against rivals such as Swiggy’s Instamart, Reliance Retail-backed Dunzo, Zepto and others. Menon has previously told ET that despite newer models, the bulk of grocery sales will come from its scheduled delivery channel, for which it has been reducing delivery times in key cities.

    “The company continues to grow 40% annually as projected earlier internally. This financial year ending March 2023, the company is expected to generate sales of $1.5 billion (net of discounts),” said one of the people cited above. ET had reported that it became the second vertical ecommerce player to have crossed gross sales of $1 billion in FY21.

    It has also been expanding its offline presence through Fresho stores as well as assisted shopping units in non-metro markets, ET has reported.

    Management lock-in, IPO plans

    Supermarket Grocery’s recent filings, sourced through business intelligence firm Tofler, showed the management of BigBasket have a share lock-in until September 30, 2023.

    Until then, they can sell up to 10% of their holdings without clearance from Tata Digital but will need its approval beyond that. Sources said that there are no secondary share sales happening in the latest funding round. Tata Digital will have the right of first refusal on any such share sale, the documents showed.

    According to the people mentioned above, BigBasket’s long-term plans for an initial public offering (IPO) remain in place, within a period of two years. BigBasket’s management had said at the time of the Tata deal that it would eventually explore a public offering, without giving any timeline.

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