PayTM Mall in discussions to invest $200 million in Big Basket

PayTM Mall, the online ecommerce marketplace, is in discussions with the online grocer Big Basket for an $200 million investment for a significant minority stake. The online grocer is expected to be valued at $550 million, a significant jump from the earlier valuation of $450 million last year when the firm last raised capital. The deal is expected to help Paytm Mall strengthen its online-to-offline strategy (using BigBasket’s partnerships with corner stores), helping them take on Amazon.

The discussions were started after the online grocer explored various strategic options, include a sale to Amazon and a merger with SoftBank-backed Grofers. Big Basket has also been discussing a fundraising from financial investors. The online grocer’s discussions with Amazon India have been on hold as the two sides have not been able to agree on various issues, including valuation. While BigBasket sought a valuation of $700-800 million for the entire company, Amazon had proposed an initial valuation of less than $500 million. However, it is still not curtains down for the deal, and they may revive discussions to come on a common ground.

All the developments are coming on the heels of news that Amazon has received DIPP’s nod for ~$500 million investment in its wholesale grocery business. Seeing the commitment Amazon has for Indian business, it will be a tough walk for other players to sustain in the hyper competitive industry.