BigBasket and Grofers start merger talks

New Delhi/Bengaluru: Online grocer BigBasket, run by Supermarket Grocery Services Pvt. Ltd, and smaller rival Grofers India Pvt. Ltd have initiated talks for a merger that, if consummated, will also see SoftBank Group, an existing investor in the latter, participate in a $60-100 million funding round in the merged entity, said three people aware of the development.

BigBasket needs the money. By far the best-funded online grocery store, it has held talks with investors such as Wal-Mart Stores Inc, Amazon.com Inc, Tencent Holdings Ltd, and Fosun International Ltd for a fresh round of funds. The talks haven’t progressed far, the people cited above said.

Consequently BigBasket, which these people said incurs a cash burn of about $6 million per month, is keen on getting the deep-pocketed SoftBank on board as it rapidly runs out of cash. Grofers, meanwhile, is sitting pretty with about $50-60 million of cash in bank and a burn of about $2 million a month.

BigBasket spokesperson did not respond to emails seeking comment. SoftBank declined to comment.

“The team at Grofers is focused on executing on our long-term strategy and we are well capitalized for that with an investor set that supports the vision. We don’t need to make any strategic moves at this time,” said Alibinder Dhindsa, founder and chief executive of Grofers

BigBasket has so far raised at least $220 million in funds from investors including Abraaj Group, Bessemer Venture Partners, Sands Capital and International Finance Corp. It last raised $150 million from a clutch of investors in March 2016 at a valuation of about $450-500 million.

BigBasket is hoping for a valuation of at least $700-800 million, while Grofers could be valued at $150-200 million, one of the three persons cited above said. “The talks are in early stages, but there is definitely interest from both parties. If the deal happens, SoftBank will invest in the merged entity but a lot hinges on the valuation. The stakeholders are yet to agree on a valuation,” added this person.

 

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