Early backers will earn at least 27% annualized returns when the travel platform goes public
Elevation Capital, Sequoia Capital and Fosun International—the financial investors in ixigo—are set to reap bumper returns as the travel platform proceeds with its ₹1,600 crore initial share sale.
They will earn at least 27% annualized returns on their investment in Gurugram-based Le Travenues Technology Ltd, the operator of ixigo, according to an analysis done by data intelligence platform VCCircle based on estimated equity valuation from the IPO. Ixigo filed draft papers for the share sale on Friday.
The biggest beneficiary will be venture capital and growth equity firm Elevation, previously SAIF Partners, with a 12-fold jump in its decade-long investment. Elevation, ixigo’s largest and oldest investor with a 23.97% stake, had invested more than ₹64 crore in 2011. The IPO would value the investor’s stake at ₹700-760 crore, giving it an annualized return of 27-28%, the analysis showed. To be sure, Elevation is looking to sell shares worth up to ₹550 crore in the IPO, making a partial exit.
For Sequoia, the IPO will multiply its five-year-old investment by about 7.5 times, valuing it at about ₹500 crore. Venture capital investor Sequoia, which had invested about ₹67 crore back in 2016, holds about 16% stake and will get more than 50% annualized return as per the IPO pricing.
The IPO will also bump up Chinese conglomerate Fosun’s ₹33.5 crore investment in 2017 by 3.5 times to more than ₹115 crore, an annualized return of about 33%.
Sequoia and Elevation did not respond to queries on their respective estimated returns on the investments. Fosun could not be reached.
In July, ixigo had raised ₹270 crore as part of a pre-IPO round led by Singapore sovereign wealth fund GIC. This round assigned an equity valuation of about ₹2,900 crore to ixigo.
According to VCCircle estimates based on the equity valuation of ₹2,900 crore that the pre-IPO round fetched, the company could seek a post-money equity valuation of about ₹4,000 crore in the IPO.
Ixigo was founded by Aloke Bajpai, Dharmendra Yashovardhan and Rajnish Kumar in 2007. The company, which swung to report net profits in the last fiscal year for the first time, made some acquisitions ahead of the IPO to expand its business and become more attractive to investors.
It acquired Confirmtkt in February and AbhiBus this month.
The company has also seen growth in key metrics. For instance, its gross transaction value grew at a compound annual rate of 135% between 2018-19 and 2020-21. Also, net sales for 2020-21 grew 21% despite covid that severely hit the travel and hospitality sector.
Ixigo, which enables people to book train tickets, flight tickets, bus tickets and hotels, saw the number of passengers bounce back in the second half of FY21.
Ixigo earns revenue through commissions, convenience fees, agent service charges, payment gateway charges, Ixigo assured fees, besides advertisements that are impression-based or click-based.
“We are the largest Indian OTA (online travel agency) in the online train bookings segment and our train-centric mobile applications, ixigo trains and Confirmtkt were collectively the leading B2C (business to consumer) distribution platforms for IRCTC (Indian Railway Catering and Tourism Corp. Ltd) with a 42% market share in terms of rail bookings among OTAs and B2C distributors of IRCTC in fiscal 2021," the firm said in its draft papers.
Ixigo’s AbhiBus was the second-largest bus-ticketing app in India, with a tenth of the market and the third-largest flight booking portal in India with a market share of 12% at the end of last fiscal, according to Frost and Sullivan.