Indian online travel company MakeMy Trip aims to raise up to $113 million this week by selling 4.5 million shares, according to a term sheet seen by FinanceAsia.
The New Delhi company wants to sell three million ordinary shares and several shareholders have proposed the sale of a further 1.5 million shares. Shareholders have 30 days to purchase an additional 675,000 shares, the company said in a statement.
The three-day bookbuild started Tuesday, with shares expected to price late Thursday at the close of US markets, bankers close to the deal told FinanceAsia. There is a 45-day lockup period.
MakeMy Trip will use the proceeds to acquire or invest in strategic businesses and to develop new forms of technology, a company filing with the Securities and Exchange Commission (SEC) showed.
Among the existing shareholders looking to participate in the sale is California venture capital firm Sierra Ventures, an investor in MakeMy Trip since before the company went public in 2010. Sierra wants to sell one million shares, which would reduce its stake in MakeMy Trip to 1.23% from 3.99%, the SEC filing said.
Nasdaq-listed MakeMy Trip – which provides air tickets, customised holiday packages, hotel bookings, railway tickets, bus tickets, car hire and travel insurance – is likely to attract a decent number of US investors, one banker said, although he noted that Asian long-only institutional investors were also a priority for those working on the deal.
He added that jittery markets were unlikely to derail the deal. Investor sentiment in Asia has soured recently as China’s growing debt concerns and tensions in Ukraine have hit markets, with the Nikkei 225 and Hang Seng indexes both now down about 5% for the year-to-date period.
“Macro events should have a little impact but it won’t be significant. What we’ve seen over the past two quarters is that people follow hot sectors quite closely and almost ignore what’s going on in the market,” he told FinanceAsia.
Tech hype, precedents
There is a lot of hype surrounding some of the initial public offerings in the works for Chinese technology companies – namely JD.com, Focus Media, and Alibaba – and the banker expects MakeMy Trip to garner similar interest.
“Tech in general is very, very popular right now, mostly around the Chinese names, and it’s not so hard for people to get interested in Indian names as well,” he said.
Two recent comparable deals include Indian search engine provider Just Dial and recently listed Chinese online travel agency Qunar.
Just Dial, which provides users with information and user reviews of local businesses, raised $165 million in its IPO in India last May. Shares are up 9% so far this year.
Meanwhile Qunar, the travel site controlled by Chinese search engine Baidu, raised $167 million in a November listing on Nasdaq. The book was more than 40 times covered and more than 500 investors participated in the deal. Qunar shares are up 26% so far this year, as are MakeMy Trip's.
Having reported solid quarterly earnings in January – revenues increased 10% year-on-year to $70 million in the three months ended December 31 – MakeMy Trip has been active on the acquisition front. In February, it acquired Amsterdam-based EastToBook.com for $5 million, which offers online hotel reservations across Europe and North America, among other destinations.
The company says the acquisition of EasyToBook.com will help strengthen its travel technology platform, and boost its international hotel room offerings for customers travelling overseas – namely to Europe, a key travel destination for Indians – and vice versa.
MakeMy Trip has access to all major domestic full service and low cost airlines operating to and from India, as well as all major global airlines to and from India. It also provides access to over 11,400 Indian hotels and guesthouses, 144,000 hotels outside of India, and Indian railways and several Indian and Singaporean bus operators.
Citi, JP Morgan and Deutsche Bank are acting as joint bookrunners on the deal.
