People familiar with the talks said the salt-to-information technology conglomerate has held initial discussions with online marketplace Snapdeal, publicly traded business-to-business etailer IndiaMART and egrocer BigBasket with the intention of picking up stakes and bulk up its digital presence.
The Financial Times on Wednesday first reported that Tata group was looking to pick up a 20% stake in Bengaluru-based BigBasket which is valued at $1.2 billion. BigBasket had also held discussions to rope in new investors like Singapore government’s Temasek, Fidelity and Tybourne Capital, for a $350-400 million financing round, as ET reported on September 29.
“ Tatas have held talks with multiple players in the ecommerce sector including with Snapdeal and IndiaMART but the discussions are preliminary,” said a person. Group insiders say many of these discussions are exploratory in nature or brought to the table by investment bankers.
“There are a lot of conversations and talks that are happening in many areas. How it strategically works for both sides takes time to figure out. There are many areas where the group is only interested in strategic partnership and not a complete buyout or stake purchase,” said the person quoted above.
Tata Consumer Products has also set up a core group to scout for acquisitions in the consumer and retail space, and is exploring potential buy-outs in hyperlocal space which could range from staples to fresh grocery to dairy, said two officials.
“The potential buyouts need not necessarily be the bigger ones with national presence. These could be smaller buyouts, hyperlocal in presence, and targeted at smaller geographies to gain share in captive markets,” one of the officials said.
On Snapdeal’s discussion with the Tata group, a person close to the company said, “We get incoming interest from companies...These are routed through common shareholders, bankers, sometimes a direct chat about what we are planning for ahead. Most of these are preliminary and exploratory.”
When contacted by ET, Tata Sons did not comment while Snapdeal’s co-founder and CEO Kunal Bahl and IndiaMART’s founder & CEO Dinesh Agarwal, did not respond to emailed queries till press time.
Tata Group chairman emeritus Ratan Tata has had a personal investment in the Bahl and Rohit Bansal-founded Snapdeal since 2014. The online marketplace has over the past two-three years scaled down in size after a scuppered deal with rival Flipkart in 2017.
Sense of Urgency
There is a sense of urgency now to tap the inorganic route to grow further, industry officials say. Except for Tata Steel's acquisition of Bhushan Steel, in the last three years the conglomerate has been largely focused on restructuring to cut costs and have a leaner structure to compete in the marketplace. The group will also seek similar synergies for its fledgeling medical devices business, officials said.
In recent weeks, the group has been in talks with investment bankers to also give heft to its FMCG business. Insiders said there is also interest to grow through the inorganic route in the dairy business where it has been checking out M&A possibilities.
The conglomerate is looking to scale its presence in online delivery and consumer space as it seeks growth and scale through the inorganic route, officials said.
Different Digital Platforms
The Tata group has separate digital platforms run by different companies. Tata Industries runs Tata Cliq, an ecommerce website and mobile application which sells apparels, footwear and electronics and categories such as accessories, home furnishings and jewellery.
Trent, which runs Star Bazaar, has StarQuik, its online grocery portal which operates in places which has a Star Bazaar. The group has a strong tie-up with Tesco and both had made fresh capital investments in the business in July 2020.
Group watchers say ensuring scale is possible only through the inorganic route in sectors such as consumer and digital where Reliance Retail has taken a huge leap through multiple strategic deals. The Tata group’s ambitious digital plan that aims to tap its combined consumer base to build products and services has been delayed this year, people familiar with the development said.
Download The Economic Times News App to get Daily Market Updates & Live Business News.
2 Comments on this Story
Radhakrishnan Ramaswami13 days ago
Better late than never. It is high time the Tata Group leveraged its tremendous goodwill and the respect it commands from the public to the group's advantage and growth. Tata is linked to India's future. Good luck and God speed.
swaminathan swaminathan13 days ago
if it happens a welcome move. congrats