The Tata group is preparing to raise $1.3 billion for its digital businesses BigBasket and Tata 1mg, with global investment banks Citi and Moelis appointed to steer the process, sources told ET.
The capital raise is aimed at strengthening the conglomerate’s position in the quick commerce and online healthcare segments, where it has lagged behind more aggressive rivals.
Of the planned raise, $1 billion has been earmarked for BigBasket — the online grocer that was initially reluctant to enter the quick commerce space but is now rapidly expanding. The remaining $300 million will go to Tata 1mg, the group’s digital health platform. Both companies operate under the Tata Digital umbrella.
According to the financial daily, Tata Sons expressed concern during a business review earlier this year over BigBasket falling behind competitors like Blinkit and Zepto. Chairman N Chandrasekaran has reportedly asked business heads to demonstrate profitability, stating that the group’s capital support won’t last indefinitely.
“The Tata group has invested significant funds till date into Tata Digital’s various businesses, and it feels it’s time to show results,” said a top official aware of the developments. “While businesses like BigBasket are seen as mature enough to drive growth based on market realities, it has to move swiftly in spaces ignored earlier, and that needs big funds.”
The group has so far invested over $2 billion into the Tata Neu superapp, which has underperformed, the report said.
Feelers are being sent to potential investors, including Canadian pension funds and sovereign funds from Asia, such as Temasek, which don’t have conflicting interests in competing retailers. While some investors are understood to be seeking an exit, an IPO for BigBasket is not on the cards immediately.
BigBasket — of which Tata owns over 65 per cent — was last valued at $3.2 billion. Its quick commerce service, BB Now, accounts for around 80 per cent of orders but holds only a 10 per cent market share in the segment. The company now aims to unify offerings across Tata brands like Croma, Zudio, 1mg, and Carat Lane, and will soon start selling prescription drugs via its platform.
"Over 95 per cent of BigBasket’s total operating revenue in FY24 was from groceries,” said a group executive. The platform has merged its BBdaily subscription service into its main app and plans to expand its dark store network to 700 locations, including tier II–IV towns.
BigBasket’s revenue from operations grew 6.27 per cent in FY24 to Rs 10,061.9 crore, while losses narrowed by over 20 per cent. The company is targeting Rs 12,400 crore ($1.5 billion) in total sales in FY25, sources said.
Tata 1mg, meanwhile, saw a 20 per cent jump in revenue to Rs 1,968 crore in FY24, with losses dropping by 75 per cent to Rs 313 crore, per RoC filings. Tata Digital owns 63 per cent of 1mg, with investors including Sequoia Capital, Intel Capital, and the Gates Foundation. The platform plans to grow both its express delivery network and physical presence.
The capital raise is aimed at strengthening the conglomerate’s position in the quick commerce and online healthcare segments, where it has lagged behind more aggressive rivals.
Of the planned raise, $1 billion has been earmarked for BigBasket — the online grocer that was initially reluctant to enter the quick commerce space but is now rapidly expanding. The remaining $300 million will go to Tata 1mg, the group’s digital health platform. Both companies operate under the Tata Digital umbrella.
According to the financial daily, Tata Sons expressed concern during a business review earlier this year over BigBasket falling behind competitors like Blinkit and Zepto. Chairman N Chandrasekaran has reportedly asked business heads to demonstrate profitability, stating that the group’s capital support won’t last indefinitely.
“The Tata group has invested significant funds till date into Tata Digital’s various businesses, and it feels it’s time to show results,” said a top official aware of the developments. “While businesses like BigBasket are seen as mature enough to drive growth based on market realities, it has to move swiftly in spaces ignored earlier, and that needs big funds.”
The group has so far invested over $2 billion into the Tata Neu superapp, which has underperformed, the report said.
Feelers are being sent to potential investors, including Canadian pension funds and sovereign funds from Asia, such as Temasek, which don’t have conflicting interests in competing retailers. While some investors are understood to be seeking an exit, an IPO for BigBasket is not on the cards immediately.
BigBasket — of which Tata owns over 65 per cent — was last valued at $3.2 billion. Its quick commerce service, BB Now, accounts for around 80 per cent of orders but holds only a 10 per cent market share in the segment. The company now aims to unify offerings across Tata brands like Croma, Zudio, 1mg, and Carat Lane, and will soon start selling prescription drugs via its platform.
"Over 95 per cent of BigBasket’s total operating revenue in FY24 was from groceries,” said a group executive. The platform has merged its BBdaily subscription service into its main app and plans to expand its dark store network to 700 locations, including tier II–IV towns.
BigBasket’s revenue from operations grew 6.27 per cent in FY24 to Rs 10,061.9 crore, while losses narrowed by over 20 per cent. The company is targeting Rs 12,400 crore ($1.5 billion) in total sales in FY25, sources said.
Tata 1mg, meanwhile, saw a 20 per cent jump in revenue to Rs 1,968 crore in FY24, with losses dropping by 75 per cent to Rs 313 crore, per RoC filings. Tata Digital owns 63 per cent of 1mg, with investors including Sequoia Capital, Intel Capital, and the Gates Foundation. The platform plans to grow both its express delivery network and physical presence.
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