Emerging markets private equity firm the Abraaj Group has led a $150 million fundraising round for Indian online grocer BigBasket.
The International Finance Corporation, a new investor, contributed $19.3 million. Sands Capital, a venture and capital growth investment manager, also invested for the first time. Existing investors which re-upped include New York-based Bessemer Venture Partners, as well as India-focused Helion Advisors, Zodius Capital and Ascent Capital, according to a press release.
Abraaj did not disclose which fund it used to invest in the grocer.
BigBasket, whose mobile application has been downloaded by more than a million users, sells more than 19,000 products including fruit, vegetables, meat and drinks across 18 cities in India. BigBasket and Abraaj attribute a five-fold increase in monthly revenues over the last 18 months to supply chain optimisation and more private label products in its sales.
Supply chains are crucial to delivering fresh produce in India, where poor supply chains can lead to up to 40 percent of fresh fruits and vegetables being wasted. India began an initiative to manufacture cold storage in 2006, and in 2014 a Knight Frank report said the need for warehousing space in the country would grow “to 1,439 million square feet by 2019”.
Having established a presence in most of India’s largest cities, BigBasket’s financing will be used to expand into Tier II cities, urban centres with 50,000 to 99,999 people. It will also scale up its express delivery and in-store emergency purchases businesses, and increase its product range.
Partner and head of Asia for the Abraaj Group Omar Lodhi said the online grocer’s business amounted to a “transformational experience” for Indian consumers.
Big Basket co-founder VS Sudhakar said the company had an opportunity to become India’s largest grocer, online or off. “We intend to increase the reach of our just-launched one-hour express delivery service and also launch our marketplace for speciality stores in the coming months,” he added.
“This coupled with an expansion in our range of private label products will create a solid foundation for growth in both revenue and profitability.”
Abraaj has deployed around $1.4 billion in Asia to date across healthcare, financial services, logistics, consumer goods, and food and beverages, and has $9.5 billion under management, according to PEI data. This is the group’s third investment into an e-commerce company and its third investment in India in five months.