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BigBasket, Grofers may merge; Is India?s online market undergoing a major shift?

An employee weighs tomatoes after packing them at a Big Basket warehouse on the outskirts of Mumbai. Photograph: (WION)

WION New Delhi, Delhi, India Apr 19, 2017, 12.36 PM (IST)

In what goes to on be a new development in India’s e-commerce space, online grocery delivery service BigBasket and smaller rival Grofers India have begun talks on a possible merger, Indian newspaper Mint reported on Wednesday, citing sources.

If the merger goes through, SoftBank Group, which is an existing investor in Grofers, will participate in a $60 million to $100 million funding round in the merged company, the report added.

The talks, which are in early stages, may value BigBasket at about $700 million to $800 million, while Grofers could be valued at $150 million to $200 million, Mint added.

Online grocery sales are a fast growing segment in India's e-commerce industry as more consumers log in to internet for their purchases.

India’s burgeoning online retail market appears to be undergoing a transition phase. Recently, e-commerce firm Flipkart raised $1.4 billion in its biggest fundraising to date. Chinese social media and entertainment firm Tencent Holdings, the world's biggest software company Microsoft and online marketplace eBay participated in the funding round, and this would go on to value Flipkart at $11.6 billion.

Amazon, on the other hand, last year had said it would invest over $5 billion in India. It recently expanded into online video and grocery shopping, seeking to expand aggressively in a country where a rising middle class is increasingly shopping online.

Besides, electronics payments provider Paytm is also in talks with Japan's SoftBank Group to raise $1.2-$1.5 billion in cash, making the latter one of the largest shareholders in the fintech start-up, reported Mint newspaper.

The deal, which could increase Paytm's valuation to $7 billion to $9 billion, will see SoftBank buying some shares from existing Paytm investor SAIF Partners and founder Vijay Shekhar Sharma beside investing money in the company, the report said.  Paytm may also buy Snapdeal-owned payments rival Freecharge, as part of the deal, added the report.


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