India’s oil-to-internet conglomerate Reliance Industries is reportedly in talks to buy e-grocer MilkBasket for over USD 40 million in a move to up the ante as another Indian conglomerate Tata has started flexing its muscles in the sector with its recent acquisition of BigBasket for USD 1.2 billion.
“Both the parties have agreed upon contours of the deal. Reliance already offered a term sheet early this month and the transaction could be announced soon,” local media Entrackr, citing three sources aware of the deal, said.
One of the three sources told Entrackr that the size of the deal is in the range of USD 40-43 million.
“MilkBasket’s Chief Executive Officer and co-founder Anant Goel will join Reliance whereas the other co-founders will move after the completion of the transaction,” said the person quoted above.
This is the second round of discussions between Reliance and MilkBasket that began last year but the deal fell as the companies didn’t agree on the valuation. The Gurugram-based startup was also in talks with Amazon and BigBasket—two leading players in the e-grocery market—for acquisition.
Founded in 2015, MilkBasket lists over 9,000 products including fruits and vegetables, dairy, bakery, and other FMCG products. The company operates on a subscription model that increases user stickiness to the platform.
Last year in June, it claimed over 130,000 households across seven cities subscribe to its products. The company raised USD 5.5 million last year in a Series B round led by Inflection Point Ventures. It has bagged a total of USD 33 million in venture capital from Mayfield India, Unilever, Beenext, Blume Ventures, and Kalaari Capital.
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Reliance has been betting big on the soon to be USD 24 billion e-grocery market as it rolled out its own online retail platform JioMart last year. COVID-19 has further accelerated its interest in the segment as last year during the lockdown Indians largely used online platforms to buy their grocery needs.
The online grocery market in India is currently laden with multiple big players such as Amazon India, Flipkart, BigBasket, JioMart, Grofers, Dunzo, and Swiggy.
Indian conglomerate Tata Group, that apart from running various other businesses also manufactures grocery products like salt, spices, and ready-to-eat packaged food is also eyeing the online grocery market. Its soon-to-closed acquisition of BigBasket is a major step in that direction.
“Tata group has a significant presence in the Indian retail market across the categories, and given an online presence is now necessitated, the potential deal will ensure faster entry into the e-grocery segment. For BigBasket, the deal helps in getting the needed funds and support for the next wave of growth,” Rohan Agarwal, director at consulting firm RedSeer told KrASIA.
According to RedSeer, due to the COVID-19 lockdown in 2020 and the associated tailwinds for e-grocery, the gross merchandise value has grown to USD 3.3 billion. “Grocery is the largest contributor to the retail basket of Indian consumers, and the online penetration has been quite limited compared to other categories like electronics, fashion, and beauty,” it said.