Yatra to merge with NASDAQ company, deal values travel portal at $218 million

In the third major deal in the Indian online travel space this year, domestic travel portal Yatra has entered into an agreement to merge with NASDAQ-listed Terrapin 3 Acquisition Corporation (TRTL). The deal values the ten-year-old Indian portal at $218 million. Yatra, like its rival Indian portal MakeMyTrip, will also list at NASDAQ.

The combined company will continue to be led by Yatra’s experienced management team under the leadership of chief executive and co-founder Dhruv Shringi.

MakeMyTrip and Ibibo together raised $430 million this year.

TRTL had raised $212.75 million in its IPO, which is now held in a trust account. MIHI, an affiliate of Macquarie Capital, has committed to purchase an additional $20 million of TRTL equity as part of the transaction. Under the terms of the proposed transaction, it is estimated that the current shareholders of Yatra will continue to own at least 35% of the issued and outstanding shares in the combined company.

The first $100 million of cash (including MIHI’s $20 million forward purchase) will be allocated entirely to the combined company’s balance sheet and to pay transaction expenses. Any amount greater than $100 million available from TRTL will then be allocated (80% of it) to current Yatra shareholders and 20% as cash to the combined company’s balance sheet. Cash payments to current Yatra shareholders will be capped at $80 million.

Yatra customers booked more than 2.8 million air travel reservations and hotel stays with a total transaction value worth more than $900 million (at current exchange rates) during the fiscal year ended March 2016, an increase of 25% from the previous year. The company claimed that 74% of transactions came from repeat clients who return to book more travel.

Shringi said: “This transaction gives us substantial additional resources to support our growth and the continued improvement of our integrated online and mobile platforms. We look forward to expanding our already extensive network of domestic and international partnerships with hotels, airlines, car services, and tour package promoters, as well as further strengthening our brand presence and technology platform.”

The online travel space in the country has attracted top dollars this year. In February, Ibibo secured an investment of $250 million from Naspers, the South African internet and media company, which is one of its main shareholders along with Chinese internet firm Tencent. The money will be used to expand its presence in the hotel segment, focus on innovations and have more users download its app on their smart phones.

The share of online in overall hotel booking was just 15% in 2015, growing more than double from 6% in 2014. There is huge headroom for growth as half of the hotel booking can shift to online in the next few years.

MakeMyTrip, the Nasdaq-listed online travel portal, which raised an investment of $180 million from Chinese travel major Ctrip in January, plans to deploy significant funds to expand the high-margin hotel booking business.

Companies are willing to invest big cash in acquisition of customers to their mobile sites or apps by offering steep discounts, a regular feature in the online travel space for some time. At the same time, there is a need to spend on improving the mobile platform and the app to offer greater convenience and ease in transactions.