MakeMyTrip to raise USD 180M from Chinese travel service provider Ctrip
OTA giant MakeMyTrip, on Thursday announced an agreement under which Ctrip.com International, Ltd., a leading travel service provider in China, will invest in MakeMyTrip. Upon completion of the transaction, Ctrip will invest USD180 million in MakeMyTrip through convertible bonds.
MakeMyTrip was founded in 2000 by Keyur Joshi, Rajesh Magow and Deep Kalra and is headquartered in Gurgaon. The company had raised Series B and C round of USD13 Million and USD15 Million respectively before going public in 2010. Most recently in November, the company had got on board Goibibo Co-founder Deepak Tuli as a senior VP to focus on new business lines in the accommodations segment. Prior to that in April 2015, MakeMyTrip had acquired Bengaluru-based travel planner platform Mygola as a part of its $15 million innovation fund to support early stage companies in travel space.
Recommended read from April 2015: After two years of partnerships and strategic investment, MakeMytrip acquires Mygola.com
Through its primary websites, makemytrip.com, hoteltravel.com, easytobook.com and others, the company claims to provide access to all major airlines, hotels, railways and bus reservation.
As a part of the deal, MakeMyTrip has granted Ctrip permission to acquire MakeMyTrip shares in the open market, so that combined with shares convertible under the convertible bonds, Ctrip may beneficially own up to 26.6% of MakeMyTrip's outstanding shares. Upon completion of the investment, Ctrip will also acquire the right to appoint a director to MakeMyTrip's board of directors. Talking about the deal, Deep Kalra, Founder and Group CEO, MakeMyTrip said
Ctrip is the dominant market leader in the online travel market in China. We believe there are many similarities in the Indian and Chinese online travel markets and we expect this strategic relationship between two market leaders to be mutually beneficial.
Ctrip CEO and Co-Founder, James Liang commented, "Today's announcement marks the beginning of the strategic relationship between Ctrip and MakeMyTrip. Through this transaction, Ctrip has now gained exposure to India's fast growing online travel market."
Future plans and YourStory take
MakeMyTrip expects to use the capital to further strengthen its leadership in India's online travel markets. The company will focus on further strengthening its market share in the Indian online travel market by offering customers a more enhanced and improved mobile booking experience across its full service travel products platform. This is especially important as rising smart-phone penetration is driving an inflection point in India's online travel opportunity. A report by IAMAI and KPMG projects that India will reach 236 million mobile internet users by 2016, and 314 million by 2017.
With MakeMyTrip's focus on their mobile strategy, this deal with Ctrip gives them a leg up over their competitors such as Yatra and Cleartrip. In terms of mobile internet penetration, China's WeChat has got tremendous traction and control with their 'app within an app' strategy and services. So this deal with Ctrip gives MakeMytrip access to capital and an ally in the otherwise hard to navigate market like China.