Tata Digital has requested additional funding from Tata Sons, the business’s holding company, to help fund the expansion of its ambitious digital retail effort, which has been hampered by geopolitical concerns. According to sources close to the situation, Tata Sons’ fully owned affiliate is said to have requested working capital funding in recent weeks.

Tata Digital is set to make a $500 million “interim investment” to compete with established incumbents such as Amazon Inc. and Wal-Mart, as well as Reliance Group’s Jio platforms. This $500 million capital infusion would be done in many tranches.

Tatas has been in discussions with worldwide investors, particularly sovereign and pension fund managers, for some time to support its digital venture.

Investors, on the other hand, remain hesitant to commit financing until the consumer responds to the official debut of the Super App, named Tata Neuto, which is currently scheduled for April 2022. The App is undergoing testing among Tata employees, who have been requested to enlist the help of extended family members to provide thorough feedback.

The digital business, which includes Big Basket, online drug store 1 mg, Croma, and Tata Cliq, is valued at more than $ 18 billion. On the other side, investors are eager to see how much revenue or gross merchandise value Tata Digital can generate in the first year of business.

Some sovereign and pension funds wanted to take part in the investment round as co-investors rather than lead investors.  As a result, Tatas intended to finish the anchor investor component first to acquire more funding from financial investors.

A group of long-term investors, such as Canada Pension Plan Investment Board, Singapore’s Temasek Holdings, SoftBank Group, Abu Dhabi Investment Authority, and two European money managers, had been contacted for a possible sale. Investors have requested more information on Tata Digital’s operating structure and prospects for integration with the group’s current retail companies, such as Trent and Titan.

Tata Digital’s take-off ambitions, which include logistics and back-end supply chain growth, will require significant financing. Tata Sons’ ability to disburse funds consistently may be limited because it must satisfy the finance needs of other group entities.

Officials claim that Tata Sons Chairman, N Chandrasekaran is personally pursuing investors.  Chandrashekharan’s reappointment as chairman of Tata last month will bolster the company’s digital strategy, as the former TCS CEO is likely to play a key role. TCS veteran Pratik Pal, CEO of Tata Digital for nearly three years, and Mukesh Bansal, Co-Founder of Myntra and Cure.fit, are currently leading Tata’s digital strategy.

About Tata Digital

The Tata Group has a long history of contributing to nation-building through founding businesses that helped lay the groundwork for India’s development. The Tata Group has established Tata Digital to construct digital enterprises that will cater to the needs of both Indian consumers and businesses, driven by this pioneering attitude.  At Tata Digital, they want to bring together strong digital skills to make people’s lives easier and to provide improved consumer experiences.

For more information, visit https://www.tata.com/business/tata-digital

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