BigBasket in final stages of $350-400-mn fund-raise

Sangeetha Chengappa Bengaluru | Updated on November 03, 2020

‘Financial and commercial due diligence have been wrapped up and is in the process of being approved’

BigBasket is in the final stages of closing a $350-400-million fund-raise, expected to be announced in the next three to four weeks. The financial and commercial due diligence have been wrapped up and is in the process of being approved, at present.

Sources said the funding round will be led by the Singapore Government-owned Temasek along with four new investors and existing investors. “The due diligence reports which have been submitted to Temasek will have to be approved by the Investment Committee, for the deal to go through. For aggressive hedge funds like Tiger Global, approval for such deals is just a day’s work. However, this will take much longer, at minimum about three to four weeks, as it is a Government fund,” said one of the sources.

Also read: Tatas eye stake as BigBasket looks for $400-m funding

With this deal, BigBasket, which joined the unicorn club last year at a valuation of $1.2 billion when it raised a Series F round of $150 million, will be armed with enough capital to expand pan India and deepen its offerings across 35 cities in which it operates. Besides Grofers, BigBasket also competes with Jiomart, Flipkart’s Supermart, Amazon’s Pantry and Prime Now offerings.

“BigBasket is trading at $1 billion GMV and its current valuation is between $2 billion - $2.5 billion. It has a good cash runway of $450 million to $500 million and can hold its own against all its competitors. And with its fund-raise nearing closure, it is in a very good position to fend off competition successfully,” said one of the sources.

Strong supply chain

When the pandemic broke out, BigBasket demonstrated its resilience. Despite having a strong supply chain in place, the online grocer was hit badly at the workforce level with hordes of employees leaving for their home towns immediately after the lockdown was announced, reducing its operational capacity to 50 per cent.

At the same time, panic scare among consumers resulted in demand on its platform surging by 5X – 6X. Its pre-Covid-19 levels of 1.5 lakh orders a day dropped to 30,000 orders a day in the first few days of the lockdown due to limited workforce strength. To deal with this, the company filtered down its 38,000 plus SKUs to 3,000 SKUS, delivered and increased productivity by 23 per cent with technology and business process re-engineering. By September, the company had grown its customer base by 80 per cent, average order value rose to ₹1,500 up from ₹1,300 in February and sales had doubled.

Also read: ‘Online grocery market to cross $3-b GMV in 2020’

Online grocery, a $1.9-billion market in 2019, is a hotly contested category as it constitutes 70 per cent of retail in India, witnessing 30-35 transactions per customer per annum. Positioned to be the next bastion of growth for e-commerce firms, it is expected to grow to over $18 billion by 2024, as per RedSeer estimates.

Published on November 03, 2020

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