Corporate

Alibaba-backed Paytm in talks to buy majority stake in BigBasket

Paytm Mall and BigBasket are discussing the deal, which is in the fast track. But talks are stuck as BigBasket wants the company to be valued ‘premium’, and also seeks a seat on the Paytm Mall board.

The online e-commerce companies are betting big on the e-grocery market in India. The new player in this segment — after BigBasket, Flipkart, Reliance and Amazon — could be Paytm Mall, the e-commerce platform of Paytm. Reports suggest the Alibaba-backed Indian company is eyeing a majority stake in Bengaluru-based BigBasket to step up its e-commerce game, especially the online grocery segment. But the company has refused to divulge any such detail so far.

Interestingly, Alibaba invested $200 million in BigBasket in February. Being one of the biggest investors in Paytm, it could play a major role in BigBasket’s acquisition by Paytm Mall. A majority stake in BigBasket will not only give Alibaba a greater say in India’s e-commerce market, which is dominated by the likes of Flipkart and Amazon but will also help both Paytm and BigBasket consolidate revenue through repeat customers.

A report published in Business Standard quoted sources saying that Paytm Mall and BigBasket are discussing the deal, which is in the fast track. But talks are stuck as BigBasket wants the company to be valued ‘premium’, and also seeks a seat on the Paytm Mall board.

The e-grocery market is expected to touch $28 billion by the end of the year, and all top e-commerce companies are vying to grab a bigger share. Amazon India Chief Amit Aggarwal had told Reuters in April that “probably in the next five years groceries and consumables would be more than half of our business”.

Just last month, Amazon and private equity fund Samara Capital acquired Aditya Birla Group’s food and grocery retail chain, More, the fourth-largest supermarket chain in India. Flipkart also made its second entry in the segment after a failed attempt with Nearby. It aims to launch an extensively separate supply chain, bringing in its own label, giving everyday discounts, etc. The company recently pumped in around $400 million to boost its online grocery vertical. Reliance e-commerce is also in the process of developing its biggest grocery store network by roping in around 3 million merchants and around 8000 grocery stores.

BigBasket delivers all products from groceries to snacks branded foods across 25 cities of India. The company brings around 20,000 plus products with more than 1000 brands to over 4 million customers. Analysts say a direct access to a built-up customer base coupled with Paytm’s financial as well as tech edge could be a win-win situation for all three companies — Paytm, BigBasket, and Alibaba.

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businesstoday
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