American tech giant Microsoft is in talks with Tata Group to join the cap table of the Indian salt-to-software conglomerate’s digital venture Tata Digital as a strategic investor.
The development comes at a time when the USD 103 billion company is looking to kick off a fundraising drive for Tata Digital—which is spearheading its ambitious super app initiative—similar to oil-to-retail conglomerate Reliance’s USD 20 billion-plus fundraising spree for its digital arm Jio Platforms last year, a report by local media Economic Times said.
“Tata Digital is keen to rope in one or two strategic investors and launch a full-blown fundraising drive,” said the report.
In October, it was reported that Tata Group would invest about USD 2 billion in its much-awaited super app—a one-stop-shop for its consumer services, including healthcare and e-pharmacy, food and grocery, fashion and jewelry, hotel bookings, consumer electronics, payments, and financial services. Dubbed TataNeu, the app is likely to be rolled out early next year after being delayed multiple times already.
The 154-year-old, Mumbai-headquartered conglomerate—with a diversified business portfolio across sectors including automotive, airlines, chemicals, defense, FMCG, finance, home appliances, hospitality industry, IT services, retail, e-commerce, real estate, steel, and telecom—has been testing the waters in the digital space since late 2016. Over the years, it quietly rolled out several apps for e-groceries, online fashion and electronics shopping, doctor consultations, and personal loans, among others. The company set up Tata Digital in 2019 to streamline its various online offerings.
When the COVID-19 pandemic hit the country in March 2020, leading to a steep rise in digital adoption among consumers and businesses, Tata Group decided to go all out to create an online retail empire and revealed its plan to roll out a super app.
It has been over a year since Tata Digital began working on its “all-in-one” e-commerce app. In the current financial year, which will end in March 2022, Tata Group has invested INR 50.25 billion (USD 662 million) in Tata Digital. Earlier this year, Tata Digital acquired online grocery platform BigBasket and digital health startup 1mg, and invested in fitness company CureFit—all of which align with its super app vision.
Once launched, TataNeu will compete directly with e-commerce giants Amazon India and Walmart-owned Flipkart to woo hundreds of millions of Indians who have embraced online shopping as a preferred mode of buying things amid the healthcare pandemic. According to RedSeer, the number of transacting users online is projected to increase to 350 million from the current 100 million by 2025, with a majority of shoppers coming from smaller cities in India.
Notably, Microsoft struck a partnership with Reliance in 2019, under which Jio brought some of its software services onto Microsoft’s Azure cloud that runs on Jio data centers across the country.
Microsoft seems to be stepping up its investments in India. Last year, the company invested in news aggregator and short-video platform DailyHunt as well as in logistics SaaS firm FarEye from M12, a venture fund by Microsoft for which it set up an India office in June 2020. Earlier this August, Microsoft invested USD 5 million in SoftBank-backed budget hospitality chain Oyo and formed a multi-year alliance to co-develop next-gen travel and hospitality products and technologies.