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Online travel company MakeMyTrip on Wednesday said it was raising $330 million (Rs 2,110 crore) through a share sale to existing investors Ctrip and Naspers as it aimed to consolidate its dominant position in the Indian market.
MakeMyTrip said the fresh funds would be used for business expansion, strategic investments, technology and product development apart from working capital purposes.
In a statement, the Nasdaq-listed portal said it had issued over 9.1 million shares to Ctrip, MIH Internet (a subsidiary of Nasper) and other public investors at $36 a piece.
The transaction, which comes six months after MakeMyTrip's meger with ibibo, values the online portal at $ 4.3 billion on a fully diluted share basis at the close of Tuesday’s stock price of $40.20.
This is MakeMyTrip’s second large fundraising following the $180-million infusion by Ctrip last January.
Nasper, which held majority stake in ibibo, is the largest share holder in MakeMyTrip with 40 per cent ownership following the merger.
Ctrip owns around 10 per cent in the company. There will be no change in share holding pattern following the fresh issue of shares.
In the nine months FY17 MakeMyTrip posted net revenue of $189 million, a rise of 12 per cent over FY16. Net margin during the period also rose two percentage points to 11.2 per cent. The company, however, continues to be in red and reported an operating loss of $47 million in first three quarters of the current fiscal.
“The growth in business is supported by strong underlying travel trends in India (domestic air passenger growth) as well as the ongoing adoption of online hotel bookings by existing and new internet users in the country,” a MakeMyTrip spokesperson said.
“The company remains debt free today and has $500 million of cash in hand following the equity raising,” the spokesperson said and added that convertible bonds issued to Ctrip in 2016 have also been been converted into equity.
“MakeMyTrip has already made its intention clear about further developing the online hotel distribution business and I will not be surprised about the fund utilisation in this segment,” said Chetan Kapoor, research analyst at travel research firm Phocuswright.
The merger between MakeMyTrip and ibibo was completed in January. “ We are now well poised to further accelerate the shift towards online bookings for the largely offline hotels market in India,” said Deep Kalra, group CEO, MakeMyTrip, after the Q3 results in January.
MakeMyTrip is the country’s biggest online air ticketing and hotel booking company. In FY16 MakeMyTrip and ibibo did 34 million transactions, of which 50 per cent came from redBus, the country's biggest online bus booking platform which ibibo acquired in 2013.
