Several mega acquisitions have taken place over the past year, the latest being the announcement by Reliance Retail to acquire a controlling stake in online search engine platform Just Dial for Rs 3,497 crore.
Recently, Tata Sons subsidiary Tata Digital acquired a controlling stake in Supermarket Grocery Supplies Private Ltd, the company better known as BigBasket.
In addition, Tata Digital and Reliance Retail acquired controlling stakes in digital health companies 1MG Technologies Private Ltd (1MG) and Vitalic Health Pvt Ltd and its subsidiaries, collectively known as Netmeds, respectively.
The two business houses that are betting big on the e-commerce space are adding these online companies to strengthen their respective online offerings.
Speaking to IANS, Technopark Advisors Arvind Singhal, President of Technopak Advisors, noted that it’s like “putting together a pearl necklace” and complementing the products and services you offer.
This greater interest in internet-based businesses can be attributed to the business growth these businesses have witnessed amid the pandemic.
India’s internet economy is booming thanks to increasing smartphone penetration and falling internet costs. Internet penetration reached 56% in January 2021, and the country’s Internet economy is expected to grow from $ 250 billion in 2020 to $ 335 billion in 2025.
While Covid-19 has had a major impact on small businesses, large tech companies have benefited from the wave of digitization that has followed.
“We estimate that the pandemic has accelerated the digitization process by 3-5 years, as the use of technology has become imperative for customers to survive and capture future demand. In India, the pandemic has particularly fueled demand in areas such as online entertainment, EdTech, e-commerce, FinTech, FoodTech, gaming and HealthTech. ” said a report from BOB Capital Markets.
Singhal of Technopak believed that in the future more acquisitions by industry majors would take place and that this competition would be in the best interests of consumers.
These acquisitions and investments, he said, have many indirect positive results as they encourage other entrepreneurs in the hope of securing major investments and takeover bids in the future.
“Has Reliance stopped looking for companies to acquire? Certainly not. Have the Tatas stopped looking for companies to acquire? Certainly not. We will see a lot more of such acquisitions.”
In addition, this growth of internet companies will also attract interest from other large companies looking to strengthen their online portfolios and several other mergers and acquisitions (M&A) could be on hold.