Tata 1mg draws investor interest amid valuation standoff

Novo Holdings, which is the principal stakeholder in Danish developer of diabetes and obesity medications, Novo Nordisk, alongside Canadian pension fund CPPIB, Permira and Chrys Capital, has expressed an appetite to invest into Tata Group's online pharmacy 1mg, a source with knowledge on the subject said.

The conglomerate is hoping to rise up to $200 million in primary capital for the next stage of growth.

This is a component of a broader capital raise for Big Basket and other Tata Digital businesses. According to the aforementioned individuals, Tata 1mg is presently regarded as one of the top-performing companies for its operational excellence  in the Tata Digital portfolio.

However, the four possible investors have proposed $750–800 million as an alternative to the $1.25 billion post-money valuation of 2022. According to company executives speaking on condition of anonymity, Tata does not approve of the fact that some people are even vying for board seats and other affirmative rights.

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If the deadlock on valuation remains, Tata Sons, the holding company of the conglomerate, could decide to invest about $75 million itself in a down round and look for the remaining amount of capital from outside investors, or it might choose to raise a smaller round. The company has a reported need for $125 million of new capital.

“1mg continues to perform strongly, with smooth execution and no major challenges on the delivery front,” said an executive close to the matter.

“Our integration with Tata Neu (positioned as a super app) has further accelerated growth and significantly scaled up the business. Investor interest in 1mg has always been encouraging, and we have been in discussions with them for some time. Funding is not a concern for us and will be secured in line with the best available options.”