Grofers eyes SPAC route for Nasdaq listing

NEW DELHI: E-grocery platform Grofers had indicated as recently as last month that it plans to expand beyond delivering your daily staples and into an all-encompassing e-commerce portal along the lines of Amazon and Flipkart. To this end, it opened sections like fashion and lifestyle; home accessories; appliances; books, stationery, toys and games; home furnishing and décor on its site.

Now, to sustain this growth momentum, Grofers is eyeing to raise $400-$500 million through a public listing on Nasdaq by merging with New York-based Cantor Fitzgerald’s blank check firm, the Economic Times reported Wednesday.

The Softbank-backed online grocer is looking to raise this money at a valuation of $1 billion through the special purpose acquisition company (SPAC) route, and has also executed a private investment in public equity (PIPE) from external investors, ET stated in its report, quoting sources privy to the development.

In the financial year 2019-20, Grofers’ revenue grew 111 per cent year-on-year to Rs 176.79 crore. But its expenses also increased by 53 per cent to Rs 814.29 crore. Thus, the company saw its net loss grow 42 per cent to Rs 637.49 crore. The merger with a SPAC will help the e-grocer raise funds for the IPO, and possibly list in India later.

Besides Grofers, other Indian startups such as Zomato, Delhivery, Droom, PolicyBazaar and Flipkart are also planning for IPOs this year. Since none of these start-ups has attained profitability, a foreign listing is the only viable option for them, as in India loss-making companies cannot raise money from retail investors directly – making SPACs – a quicker and easier way than IPOs to shore up funds – one of the buzzwords currently ruling the start-up ecosytem.

Launched in December 2013, Grofers is among the oldest proponents of online grocery delivery in India. Along with platforms like BigBasket and Zopnow, Grofers has been deeply involved in the creation of grocery delivery as a sub-segment within the e-commerce category.

Backed by Covid2019 tailwinds, India’s online grocery market grew 73 per cent in 2020. The gross merchandise value of the e-grocery market, led by the likes of BigBasket, Grofers, Amazon Pantry, Flipkart Supermart, increased from $1.9 billion in 2019 to $3.3 billion in 2020, according to RedSeer. The sector is expected to grow to $5.3 billion in size in 2021 and up to $26 billion by 2025 driven by digital adoption in markets beyond urban geography.