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MakeMyTrip raising $330 mn from Naspers, others

03 May, 2017

Nasdaq-listed online travel services provider MakeMyTrip Ltd is raising $330 million (Rs 2,116 crore) from South African technology group Naspers, Chinese travel firm Ctrip.com and other investors.

MakeMyTrip will mobilise $132 million from Naspers by allotting 3.66 million Class B Shares at $36 apiece and $33 million from Ctrip by issuing 916,666 ordinary shares at the same price, the travel company said in a statement. The Class B shares will be convertible into ordinary shares.

The company will also raise $165 million more via a share placement to investors it didn’t identify.

The transaction is likely to be completed by Friday.

The company said it will use the funds for business expansion, strategic investments, technology and product development, marketing and promotions, general corporate purposes and to meet working capital.

Naspers, which already has a 36% stake in MakeMyTrip after the Indian company’s merger with ibibo Group in October last year, will continue to be the single-largest stakeholder.

For Ctrip, the deal will cement its position as one of the significant minority shareholders. In January 2016, it invested $180 million in MakeMyTrip, which gave the Chinese travel company about a 26.6% stake in MakeMyTrip’s outstanding shares.

In February this year, one of MakeMyTrip’s early investors SAIF Partners fully exited the firm, securing multi-bagger returns to the tune of nearly $400 million, or about 16 times its investment, according to estimates by VCCircle.

MakeMyTrip offers services that include air ticketing, hotel and alternative accommodations bookings, holiday planning and packaging, rail ticketing and intercity bus ticketing. Its other brands include RightStay.com and Redbus.in.

The company’s net revenue jumped 81% in the quarter through December 2016 to $76.5 million. Revenue from the air ticketing business increased 120%, to $38.2 million, while that from the hotels and packages business grew 52% to $35.5 million.

The company recently forayed into the budget hotel segment, after indicating that it was all set to become a full-stack services player in the online travel agency segment. While ticketing, tours and travels are traditional segments where margins tend to stagnate, the hotel segment is a crucial category where MakeMyTrip must make significant inroads to establish itself as a dominant player.

Last month, The Times of India reported that the company was in talks with budget hotels player FabHotels to acquire a stake, after talks with another budget hotel chain Treebo Hotels fell out.

MakeMyTrip faces intense competition from well-funded homegrown players like Oyo Rooms as well as the international firms like Airbnb and Booking.com, who are rapidly expanding operations in the country.

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MakeMyTrip raising $330 mn from Naspers, others

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