India-based grocery e-commerce companies Grofers, which is backed by telecom and internet group SoftBank, and BigBasket have entered talks over a merger, LiveMint reported today.
SoftBank, which is reportedly also considering a billion-dollar investment in local e-commerce and payment company One97 Communications, would look to invest in a round for the merged company sized between $60m and $100m, according to three people aware of the development.
Grofers runs an on-demand grocery service that enables users to order goods from local shops which the company then delivers to their door, but it has latterly moved toward selling its own branded goods and away from the expenses incurred in the hyperlocal model.
The company has raised $165m in funding from investors including SoftBank, which led its $120m series C round in late 2015 at a valuation of more than $300m, as well as Tiger Global Management, Sequoia Capital and Apoletto Managers.
BigBasket operates an online grocer that offers more than 18,000 products to customers in 21 urban markets. It has raised $245m in equity financing from backers including International Finance Corporation, Sands Capital, Bessemer Venture Partners and Helion Advisors.
Abraaj Group led BigBasket’s last round, a $150m series D in March 2016 that valued it at $450m. BigBasket recently entered talks with prospective investors for funding at a reported $1bn valuation but the negotiations have not progressed, the sources told LiveMint.
The issue is that BigBasket is burning through some $6m a month according to the sources, whereas Grofers has cash on hand, a lower burn rate and a deep pocketed backer in SoftBank.
BigBasket is seeking a valuation of “at least” $700m to $800m in the prospective merger, which would value Grofers at between $150m and $200m, one of the sources stated, adding that the companies are interested but have yet to agree on respective valuations.
– Image courtesy of Grofers