The Tata Group is contemplating injecting another $2 billion of fresh capital into its super app -- Tata Neu -- through the conglomerate’s digital arm, Tata Digital, reported Bloomberg, citing people familiar with the developments.
Neither Tata Group nor Tata Digital has confirmed the news.
If the deal materialises, Tata Digital is likely to receive the amount over two years. The deal could help the online platform widen its digital offerings, improve technicalities and meet other enhancement requirements.
Tata Neu was modeled on China’s Alipay and WeChat. It allows users to buy groceries and gadgets as well as reserve airplane tickets and restaurants from brands under Tata. The app also comes with a membership service and offers financial products such as bill payments, loans, and insurance.
However, the app was bogged down by technical glitches ever since it went live in April last year, which was followed by customer complaints soon after its launch last year.
The Tata Group has asked Tata Digital to look for ways to boost the valuation of the super app and the fresh capital could help online platform Tata Neu, which went live last April, to strengthen its digital offerings, fix technical glitches, and meet any new spending needs, the Bloomberg report stated quoting sources.
Importantly, if the deal proceeds, the fresh capital infusion would come at an opportune moment as Tata Digital is reviewing its strategy and fending off entrenched e-commerce rivals such as Amazon.com Inc. and Walmart Inc’s Flipkart. Moreover, Reliance Industries and Adani Group are also looking to launch their own super apps.
Also, Tata Neu is on track to meet just half of the sales target in FY23, its debut year. The super app is expected to report sales of about $4 billion, compared with the $8 billion target set at the beginning of 2022, according to a January report by Bloomberg.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
