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Tata Sons in talks to raise $2.5 billion for its digital business empire

The $113 million producing grocery products to passenger cars company, Tata Sons has reportedly been discussing with foreign investors to raising around approximately $2-2.5 billion for its digital business empire, with all the Tata Group launching its ‘super app,’ which will offer a wide variety of products in the e-commerce sector, financial services, fashion, lifestyle, etc.

The projected initiative is important because it will bring the 152-year-old Tata Group in direct competition with Reliance JioMart, Amazon India, and Walmart-owned Flipkart, all controlled by the top billionaires. In addition, the digital style has also gained acceptance in Tier 2 and Tier 3 cities following the Covid-19 outbreak.

Tata logo on Glass

Tata’s goals for super apps depend significantly on start-up acquisitions which have a tremendous consumer brand awareness and significant market share. As such, a huge amount of money is needed in the bank to fund M&As such as BigBasket’s $1 billion acquisition and the majority takeover of 1MG earlier this month, among others. For context, the company will combine several of the group’s current digital companies, such as Tata Cliq and several educational apps, into the super apps list. In addition, the app will likely reward loyalty points upon usage, where users can redeem those points to book Vistara flights or stay in a Taj property.

According to a report by Economic Times, Tata Sons Chairman N Chandrasekaran met with various investors during his recent trip to the United States in May to promote the company’s new initiative. Private Equity firms are likely to be approached in the early stages, followed by strategic investors as the business expands.

Mukesh Bansal, the co-founder of fitness startup Curefit, who just joined Tata Digital as president, is one of the main members of the fundraising team. Bansal was formerly working with Myntra before starting Curefit. He was the head of commerce at Flipkart after the company acquired Myntra in 2014. To compete with giants Amazon, Flipkart, and Reliance’s JioMart, Tata intends to boost the company’s digital footprint across all sectors.

In the final year of his first five-year term as Chairman of Tata Sons, Chandrasekaran wants this megaproject to go live. The Tata Group also aggressively plans to raise capital from global investors, following Ambani’s footsteps, who raised around $20 billion in 2020 for his digital enterprises from internet conglomerates like Facebook, Alphabet, private equity firm Silver Lake Partners, and others.

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