MakeMyTrip gets funds from China’s Ctrip.com
$180 million investment will be done through convertible bonds; Ctrip can own as much as 26.6% in the company
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Mumbai: Online travel agency MakeMyTrip Ltd on Thursday said China’s Ctrip.com International Ltd will invest $180 million (about ₹ 1,200 crore) in the company through convertible bonds.
MakeMyTrip, in a filing to the Nasdaq, said that it has granted Ctrip.com permission to buy MakeMyTrip stock in the open market, so that combined with the shares under the convertible bonds, Ctrip.com can own as much as 26.6% stake in the company.
According to terms of the deal, Ctrip.com will have the right to appoint a director to the MakeMyTrip board.
“We believe there are many similarities in the Indian and Chinese online travel markets, and we expect this strategic relationship between two market leaders to be mutually beneficial," said Deep Kalra, founder and group chief executive at MakeMyTrip.
Ctrip.com International Ltd, launched in 1999, is a leading travel service provider of accommodation reservation, transportation ticketing, packaged tours and corporate travel management in China. In fact, it is the largest online consolidator of accommodation and transportation tickets in China in terms of transaction volume, the filing said.
“Today’s announcement marks the beginning of the strategic relationship between Ctrip and MakeMyTrip. Through this transaction, Ctrip has now gained exposure to India’s fast growing online travel market," said James Liang, chairman and chief executive at Ctrip.
MakeMyTrip’s revenue rose to $299.6 million in the year ended 31 March 2015 from $255.3 million in the previous year.
The company narrowed its loss to $18.35 million from $20.9 million in the previous year. The firm last reported an annual profit ($7 million) in 2011-12.
The firm has reported an average annual revenue growth rate of 24.5% in the past five financial years.
In 2014, MakeMyTrip set up an innovation fund of $15 million to invest in start-ups, through which the company has acquired minority stakes in several firms.
In January 2015, it bought a 25% stake in Bengaluru-based digital hotel marketing solutions firm Simplotel, using money from the innovation fund.
Following that deal, in April, it acquired the assets of travel planning website Mygola.com.
In May, MakeMyTrip bought an 18% stake in Inspirock.com (based in California), an online planning tool for developing customizable itineraries, while in July, MakeMyTrip acquired a 28% minority stake in Leisure and Lifestyle Information Services Pvt. Ltd, the operator of leisure planning website HolidayIQ, for $15 million. The HolidayIQ investment did not come from the innovation fund.
Between 2011 and 2014, MakeMyTrip had either completely bought out or acquired stakes in five companies in Southeast Asia and India.
MakeMyTrip had an average of about 7.8 million unique visitors per month in fiscal year 2015. With more than 12.5 million downloads (as on 30 September), MakeMyTrip’s mobile app is one of the most widely used travel apps in India. As of 9.57pm India time on Thursday, MakeMyTrip’s stock surged 28.74% to $21.13 on Nasdaq.
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