According to persons familiar with the situation, the Tata Group has conducted negotiations with Microsoft Corp about becoming an anchor investor in its new digital platform. According to the sources, the coffee-to-cars business is looking for one or two key investors before launching a full-fledged fundraising campaign.

As powerhouses such as Amazon and Mukesh Ambani-led Reliance Industries pile into the country's fledgling ecommerce market, Tata Sons Chairman N Chandrasekaran has upped the ante on modernising the group's diverse consumer businesses by combining digital assets across various businesses under a new entity.

According to group sources, Chandrasekaran is eager to follow in the footsteps of Reliance Jio, which raised Rs 1.45 lakh crore ($20 billion) from shareholders last year, with Facebook (Meta Platforms Inc.) and Google (Alphabet Inc.) serving as significant limited partnership for the telecom. According to officials in the know, the $103 billion Indian multinational hopes to finalise the cornerstone shareholders by late next year. However, they stated that the conversations with Microsoft may not result in a deal.

'The proof of concept is the problem for a new investment.' Jio already had a product up and running. In Tata's case, all of the puzzle pieces have yet to come into place. 'Where has the amazing app gone?' An executive spoke on the condition of anonymity because the discussions are still secret. Tata Sons did not respond. Microsoft's spokesman stated that the business would be unable to comment on the situation. Microsoft is one of the Big Tech businesses that has been acquiring or investing in companies. It came dangerously close to breaking records in the third quarter of this year, with seven transactions, including six buyouts, and a $5 million investment in budget accommodation brand Oravel Stays (Oyo). 

ET was the first to disclose on June 22 that the Tata Group was looking to fund $2-2.5 billion for its digital division. Goldman Sachs has been given the task.

Tata's platform, a super app dubbed Neu, will serve as an ecommerce gateway for the company's consumer products and services, which range from appliances to groceries and medications to resorts and jewellery. This intends to compete with Amazon India and Walmart Inc's local online venture Flipkart to entice more than one billion Asian market in a sector that is constantly expanding. However, the regulatory uncertainty surrounding the space has pushed back the launch date.

Personal Preference

According to the CEOs, Chandra has personally led the majority of the early conversations. He is said to have met with Microsoft India president Anant Maheshwari after meeting with officials from the software giant in the United States. 'There is confidence among investors in the Tata Group.' 'With Tata Digital, the discussions are about long-term objectives, and shareholders are also eager to see how consumers react to the app once it is formally released,' a Tata Group source said.

A few of the consists of a set that Chandrasekaran has tapped, particularly those from the Middle East, may be familiar with the Jio cap table and may thus invest through other arms, such as Flipkart's recent capital round, to prevent future conflict of interest. In 2020, Jio and Microsoft established a cooperation for enterprise solutions. Tata Digital, in which the Tatas have spent Rs 5,025 crore this fiscal year, has already purchased controlling holdings in e-grocer BigBasket and digital health startup 1mg, as well as CureFit, a fitness company. Tata Sons, the group's parent company, houses Tata Digital.

The Tata Group has invested Rs 5,100 crore in two company firms so far, the highest-ever money injection by the group in a year in the digital commerce area. The amount of investment has yet to be determined.

Big Tech has had a banner year.

With the Covid-19 epidemic exacerbating the need to automate enterprises, Google ’s parent Alphabet Inc. and Microsoft have enjoyed record revenues. As businesses acclimated to cloud computing, demand remained stable, thanks in part to remote working, while advertising sales at Google increased as travel and retail patterns improved internationally.

Microsoft stock has gained 54.5 percent This October, Microsoft's quarterly revenue growth was at its highest level since 2014, thanks to the performance of its cloud segment, which climbed by 36 percent, according to corporate data. FAANG is an acronym that stands for Facebook (now Meta), Amazon, Apple, Netflix, and Google (parent entity Alphabet).

This year, Microsoft paid $19.7 billion for Nuance Communications, a voice synthesis and speech recognition business, making it the second biggest M&A deal ever after the $26 billion LinkedIn acquisition in 2016. The US Securities and Exchange Commission and the European Commission approved its $7.5 billion acquisition of video game company ZeniMax earlier this year.

Simultaneously, Microsoft finalised its acquisition of the Marsden Group, a business that specialises in industrial technology innovation and fast prototyping.This has also aided the Redmond, Washington-based company's acquisition of enterprises across a wide range of industries. It has invested in RiskIQ and CloudKnox Security to strengthen its cyber security and cloud offerings. Peer5 was primarily used for networking, whereas TakeLessons and Clipchamp aided in the consolidation of digital media. AI (Suplari), big data (Suplari), and ecommerce (Oyo) were also big bets. 'From LinkedIn to Nuance, Microsoft is recognised for making big bets,' a technology-focused investment banker noted. 'The FAANG businesses are under increased regulatory scrutiny.'