Alibaba to lead fresh funding for BigBasket
Alibaba (BABA) is preparing to inject $50 million in fresh funding in BigBasket, India’s top online grocery retailer, according to a report from Bloomberg. In addition to Alibaba’s contribution, BigBasket is on track to raise an additional $150 million in capital cash to support its growth in India’s grocery market.
BigBasket is seeking to raise more cash at a time when Amazon (AMZN) and Flipkart have also stepped up their competition for grocery expenditures. Amazon, for instance, is trying to woo grocery shoppers in India with the promise of express delivery service that lets them receive their orders within two hours. Flipkart is majority owned by Walmart (WMT), which last year invested $16 billion to purchase a 70% stake in the business. Before that transaction, Flipkart raised $1.4 billion from a group of investors including Microsoft (MSFT), Tencent (TCEHY), and eBay (EBAY). eBay later sold its stake in the business to Walmart.
Alibaba pursuing nearly $72 billion in India’s e-commerce market
The funds that Alibaba and other investors are planning to inject in BigBasket should give the business more financial flexibility as it battles to defend its market share from encroachment by Amazon and other rivals.
Alibaba currently relies on its China operations for the bulk of its revenue. In the third quarter, which ended in December, China’s retail operation contributed 70% of Alibaba’s total revenue. Therefore, investments in overseas businesses like BigBasket provide an outlet for Alibaba to diversify its market outside China.
Through BigBasket, Alibaba is pursuing more than $40 billion in India’s online retail market this year. According to eMarketer estimates, $32.7 billion was spent on online retail purchases in India in 2018, with the spending poised to exceed $40.8 billion this year. By 2022, India’s online retail market is forecast to grow to $71.9 billion. Alibaba is the largest shareholder in BigBasket.