Online grocery businesses have been flourishing in this unprecedented crisis when everyone else is barely getting by this phase. BigBasket, one of the biggest online grocers in the country is in discussions to raise about $150 million- $200 million considering online grocery sales will just get better from hereon.
In the initial phase of lock-down, e-grocers faced an issue with the supply chain but with time the companies figured out the way to optimize their channel. Online marketplace was given more preference due to the fear of contraction of deadly virus and restrictions on movement.
According to sources, BigBasket has appointed Goldman Sachs and Morgan Stanley to facilitate the funding process. They are expecting to raise something between $150 million to $200 million as they eye $2 billion valuation after this round. The company raised $150 million last year at a valuation of $1.2 billion in a funding round contributed by South Korea’s Mirae Asset-Naver Asia Growth Fund, UK’s CDC Group, and existing investor Alibaba.
One of the sources stated, “The lockdown will impact consumer behaviour and more people will be using e-commerce for purchasing essentials like groceries going ahead. While many other tech firms have jumped into selling groceries, this has been BigBasket’s mainstay from day one and so they are expected to benefit disproportionately from this tailwind in the coming months.”
There are speculations that this might be the last private round of raising capital for the company before it goes public. BigBasket plans to go public after 12 months of this fundraising round either in India or in international market.
Even though the way ahead appears to be pretty smooth for online grocery stores, the Government’s new FDI policies will make it hard for BigBasket to procure funds. According to new guidelines, the government has banned entry of fresh investments from its neighboring countries including China through automatic route. Now it is mandatory for all the investors to go through the government before entering Indian market. Chinese e-commerce giant Alibaba is BigBasket’s biggest investor and because of the new instructions, the company will not be able to procure funds