Looks like India’s traditional industrial conglomerates have risen up to the massive, perhaps multi-trillion ecommerce and digital opportunity in India. After Reliance Industries went on a record-breaking $20Bn+ fund-raising spree for its tech behemoth Jio Platforms, it is now Tata Sons, one of India’s oldest and among the world’s largest business conglomerates, that is looking to tap into India’s digital frontier.
According to a slew of media reports, including those from Reuters, ET and Mint, American retail giant Walmart, is in discussions to single-handedly invest nearly $20-25 billion for a large stake in the new super app that will be formed as a subsidiary of the Tata Sons. If this happens, it will become the largest deal ever made in the Indian retail market, surpassing the $16 billion investment by Walmart itself, in Flipkart. The app will be established as a joint venture between Tata and Walmart that could see a potential partnership between Flipkart and the new app as well.
A source told LiveMint, “The super app may include Flipkart’s offerings from Walmart and the entire retail product franchise housed by the Tata group on one platform for retail customers. And on the other hand, Flipkart could get to be powered by Tata.”
This news comes right after several reports claimed that Tata is in talks to rope in investors for its new digital marketplace. Tata wants to replicate exactly what Reliance Retail and Jio Platforms did this year and seeks to partner with financial or strategic investors, including global technology companies for its new endeavor.
India has become a gold mine of sorts, specially for businesses looking to scale up on the digital front. In the past half a decade or so, India has seen a sustained push towards a more digital economy, including tremendous efforts from the government’s end. And while all of those efforts may have not materialised, the ones that have, are enough for foreign investors to pump in massive sums in India’s digital story.
On the Tata front, Walmart is not the only investor in talks as Tata looks to invite other foreign investors too. That includes strategic investors, as well as global technology giants, along the lines of Jio Platforms. American investment bank Goldman Sachs is reportedly assigned as the investment banker in this deal, according to another source.
One of the sources said, “Walmart is keen to get a strong brand backing its e-commerce business, while Tata group wants a global name and an established player in the online space to boost sales of products currently sold through Tata group’s retail subsidiaries and online platforms to be able to compete against Reliance Industries’ Jio Platforms and Amazon.”
The valuation of Tata’s new platform is expected to be around $50-60 billion and is projected to launch in December or January in India.
Tata’s new super app can largely benefit from the company’s existing presence in the retail and manufacturing business. The Indian conglomerate is already involved in manufacturing and selling FMCG such as tea, spices, packaged food, grains, pulses and etc. It has its own line of apparel, watches, electronics – Croma and Tata Sky, and eyewear.
Through its new ‘super app’ Tata will look forward to merging all of its retail services in one place and with a potential tie-up with Flipkart, it will effectively compete with Jio platforms and Amazon in the Indian e-commerce market.
Tata Sons, which owns over 15 listed entities in India, along with over 150 unlisted private corporates globally, has a valuation of nearly $113 billion. That, when most of its unlisted entities remain uncounted. The group employs over 700,000 people globally, and is the owner of some of the most iconic global brands. The group’s IT arm, Tata Consultancy Services, alone has a $100Bn+ valuation and is among world’s top three IT companies.