Alibaba, Paytm investment in BigBasket almost a done deal

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Chinese e-tailing giant Alibaba and homegrown e-wallet company Paytm are set to invest about $200 million (Rs 1,277 crore) in SuperMarket Grocery Supplies Pvt. Ltd-owned BigBasket, people familiar with development told VCCircle.

The announcement may just be a matter of time, said one person, adding that the Bengaluru-based grocery startup’s pre-money valuation will be about $600 million.

Amazon was also in the race to back BigBasket, but the US-based e-tailer’s offer was apparently rejected as it was seeking a lower valuation of about $450 million, another person told VCCircle.

Email queries to Paytm and Alibaba did not elicit any response, while text messages sent to BigBasket chief executive Hari Menon remained unanswered till the time of filing this report.

On Friday, The Ken had reported that BigBasket had secured $280-million in a Series E round from existing investors Sands Capital and The Abraaj Group, besides new investors Paytm Mall and Alibaba Group.

Earlier, The Economic Times had reported that Paytm Mall and Alibaba had extended the exclusivity period of their negotiations with BigBasket, while The Times of India had quoted unnamed people saying Amazon had shown interest in picking up a minority stake in SoftBank-backed Grofers.

A possible investment in BigBasket will give Paytm the firepower to fight Amazon, which has already received the government’s nod to invest $500 million in India’s food retail sector. The development also assumes significance as Paytm and Alibaba were looking to spearhead a consolidation in the e-commerce space.

The Jeff Bezos-led Amazon plans to open brick-and-mortar outlets, apart from an online portal, to sell grocery items. The new business unit will sell third-party or Amazon’s private labels of locally-produced and packaged food products, which would give the company a significant mileage in a segment that’s predicted to drive e-commerce growth in future.

According to foreign direct investment regulations, multinationals can set up wholly-owned subsidiaries of retail food products in India as long as the items are produced, processed or manufactured in the country.

Bengaluru-headquartered BigBasket has so far raised about $250 million and has posted over three-fold increase in its revenues to Rs 563 crore for 2015-16. It had expanded operations to over 30 cities from just six in 2016, and is betting big on its private-label business to become profitable by March 2018.

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