BackExit took longer than anticipated, says Yatra’s Dhruv Shringi
Yatra's deal with Terrapin comes years after firm's original exit plan of going public in 2012 was shelved due to troubles in the aviation market
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Online travel agency Yatra Online agreed to a reverse merger with special purpose acquisition firm Terrapin 3 Acquisition Corp. on Thursday in a multi-phased transaction that assigns it an enterprise value of $218 million.
The transaction will provide a partial exit to a clutch of venture capital investors—including Norwest Venture Partners (NVP), Reliance Venture Asset Management Ltd, IDG Ventures, Valiant Capital and Intel Capital—that invested in the company over the past 10 years. NVP, Yatra’s earliest backer, first invested in the company in 2006.
The transaction comes years after the company’s original exit plan of going public sometime in 2012 was shelved due to unforeseen events in the Indian aviation market, then the only revenue stream for Yatra.
In an interview to Mint, Dhruv Shringi, co-founder of Yatra Online, said that while it took longer than anticipated for the company to reach a point where it could provide an exit to investors, he is satisfied with the end result given the turbulent times in 2012 that the company went through.
“I think from an end result point of view we are where we would have wanted to be. It has taken us much longer than what we had anticipated," said Shringi.
The journey of the firm, which started operations in 2006, helping customers book airline tickets online on its platform, has seen three distinct phases—rapid growth in the early years, failure to go public and then rebuilding.
“The first phase of 2006-12 was a period of euphoric growth for the company. We never thought that the market would adopt Yatra and online travel the way it did and we scaled up very rapidly," said Shringi.
The second phase was in 2012, when the company , on the back of its strong performance up till that point, was looking at accessing public markets. However, things did not go according to plan.
“Around that time the unfortunate events of Kingfisher (Airlines) collapse happened. The airline was (holding) around 22% of total market share when it collapsed. The business went through a very turbulent phase, as a large part of our business was dependent on domestic air travel," Shringi said. In 2012, more than 90% of Yatra’s revenue came from the segment.
With over 20% of its revenue disappearing overnight, the company had to shelve its initial public offering (IPO) plans and focus on rebuilding and diversifying its revenue streams. The fact that oil prices were going up, leading to lower growth in domestic air travel, didn’t help the company’s cause, Shringi added.
“To de-risk ourselves from air travel we made the acquisition of Travel Guru to start our hotels product. We also went through this phase of cutting back our costs and automating processes," said Shringi.
Yatra could have done without the Kingfisher episode, he said.
Shringi added that despite the turbulent times, the company’s investors supported the management, helping it rebuild. He added that the company never faced any pressure from its investors to sell out. “None of the investors, at any point, sold any part of their stakes."
Today, around one-third of Yatra’s revenue comes from its hotel packages business, said Shringi, with the rest coming from air travel. Even within the revenue from air travel, a meaningful portion now comes from international air travel.
Going ahead, Yatra will continue to focus on growing its hotels business, said Shringi.
“In the hotel business we have adopted a comprehensive multi-channel strategy and we will continue to build on that. We will strengthen our consumer direct business, we will strengthen our corporate business and our business-to-business network. The way we think about ourselves is as a marketplace platform where you want more and more sellers to come and let the sellers reach deeper consumer segments which they directly might not be able to achieve," he said.
Yatra’s competitors, such as Nasdaq-listed MakeMyTrip and Naspers-backed Goibibo, have also been focusing on the hotels segment.
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