Exclusive: Ahead of acquisition, Tata Digital infuses Rs 100 Cr debt in 1mg

Even as Tata Digital is in the final stages to acquire a controlling stake in healthtech company 1mg, the company has infused debt money in the Gurugram-based venture. According to regulatory filings, Tata Digital is picking up Rs 100 crore worth compulsorily convertible debentures or CCDs in 1mg. 

1mg has allotted 29,054 CCDs at a price of Rs 34,417.87 per debenture to raise the sum. The Sequoia-backed firm has already received Rs 25 crore while the remaining Rs 75 crore will be infused at a later stage.

According to Fintrackr, Tata Digital’s investment has valued the eight-year-old firm at Rs 1,770 crore or $240 million.

This is the maiden investment of Tata Digital in 1mg. The CCDs will have a nominal interest rate of 0.00001%. When these CCDs are converted as per the terms of the agreement between the companies into equity shares, Tata Digital will control 5.66% stake on a fully diluted basis. 

Tata Digital is reportedly expected to acquire over 50% stake in 1mg. The two companies have been in talks since November. The acquisition would strengthen the e-commerce initiative for the 150-year-old firm. Unlike Reliance, Tata didn’t focus much on the pure-play digital business in the last decade. 

However, it appears that the group has now realised the potential in the e-commerce segment. It’s also acquiring a majority stake in the Bengaluru-based e-grocery platform BigBasket in a deal that values the company over $1 billion. 

Founded by Prashant Tandon, Vikas Chauhan, and Gaurav Agarwal, 1mg was hived off from Healthkart in 2015. Besides selling directly to consumers, 1mg also targets corporates, OPD in insurance and patient support programmes in partnership with pharma companies.

As of now, the company has raised over $200 million across several rounds from Corisol Holding, IFC, Redwood Global and Korea Omega Healthcare Fund, Sequoia, Maverick Ventures, Omidyar and Kae Capital among others.

According to Fintrackr, 1mg had recorded a 77% jump to Rs 358 crore in its operating revenue in FY20 from Rs 202.3 crore in FY19. It seems that strong revenue streams are one of the major reasons for Tata Group’s interest in 1mg. Its losses also rose by 6.6% to Rs 318 crore during the fiscal ended in March 2020.