Venture capital firms-backed online travel and hotel booking firm MakeMyTrip Ltd successfully completed a $70-million initial public offering at Nasdaq. The firm will be getting $54 million through fresh issue and the rest will be go to VC firms SAIF Partners, Helion Ventures and Sierra Ventures besides certain management executives including founder Deep Kalra who are making a part exit.

The Gurgaon-based firm had indicated a price band of $12-14 per share and placed the shares at the upper end of the price band on Wednesday. The shares will start trading in the US market from Thursday.

The decade-old MakeMyTrip, that began its services targeting overseas based Indians booking tickets for home, has over the last five years become one of the top local players as Indian e-commerce business picked up along with spread of internet services in the country.

After meeting all issue expenses and other outgo, MakeMyTrip is expected to net around $44.3 million that it plans to use to expand operations by acquiring or investing in strategic businesses or assets that complement its service and product offerings, to enhance its technology, as well as for working capital and other general corporate purposes, as per its regulatory filing earlier.

The issue pegs the valuation of the firm around $450 million. Post issue, SAIF Partners' 51.2% stake has come down to 43.79%, founder Deep Kalra’s holding (14.45% to 11.62%), Helion (11.97% to 10.2%) and Sierra Ventures (7.98% to 6.81%). SAIF’s remaining stake is now valued at $209 million which is as much as 10x its total investment till date.

For the quarter ended June’10, its revenues increased 49% to $33.7 million over the year ago period. Sales from air ticketing business rose 27.8% to $10 million primarily due to a 63.6% growth in gross bookings to $146.5 million in the quarter which was partially offset by a reduction in net revenue margins from 7.9% in the quarter ended June 30, 2009 to 6.8%. The reduction in air ticketing net revenue margins was due to reduction in service fees charged on domestic air ticketing business to attract more customers.

Meanwhile, revenues from hotels and packages business increased 59.5% to $23.2 million in the quarter ended June primarily due to 74.8% increase in our hotels and packages gross bookings to $28.2 million in the quarter. This business also saw reduction in net revenue margins from 13.6% in the quarter ended June 30, 2009 to 11.9% in the quarter ended June 30, 2010.

Reduction in net margins in the two key businesses indicate increased pressure in the market that has now half a dozen online travel services firms, some of them also backed by other venture capital investors. The key to its earnings in the future would be how closely it is able to control cost while leveraging its dominant position in the market to grow its topline.

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