SUMMARY
The traveltech startup filed the DRHP on 25th March 2022 for an IPO worth $100 Mn
Yatra will offer up to 88,96,998 equity shares via THCL Travel Holding Cyprus, a holding of the parent company Yatra Online, Inc
The startup looks to raise capital at a high valuation to reduce dilution and avoid any balance sheet risk
Yatra Online Limited, the Indian arm of US-listed traveltech company Yatra Online, Inc. has filed for a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for INR 750 Cr IPO.
Inc42 had reported in September 2021 that the traveltech startup is evaluating an India IPO, while the parent company is listed on NASDAQ.
The online travel aggregator (OTA), Yatra filed its DRHP on March 25, 2022, and will look to raise INR 750 Cr or $100 Mn through the IPO. It will offer up to 88,96,998 equity shares via THCL Travel Holding Cyprus Limited (“THCL”), a subsidiary of Yatra Online, Inc., which amounts to approximately 8% of the shares outstanding of Yatra Online Limited.
In a statement, Yatra said that with the IPO, it expects to gain access to Indian investors. Incidentally, because of the fact that Yatra’s parent company is listed on NASDAQ, many Indian institutional and retail investors have not been able to invest in the traveltech company because of regulatory restrictions.
Yatra will also look to expand its shareholder base, add Indian capital markets to the same, and increase its visibility among equity analysts. Lastly, Yatra also wants to raise capital at a high valuation to reduce dilution and avoid any balance sheet risk.
Dhruv Shringi, CEO of Yatra Online, Inc., said, “With this proposed equity offering, we will be able to tap into a complementary shareholder base which provides a tremendous opportunity to benefit from growing tourism spending in India and to accelerate the important growth initiatives we have underway, driving value for our investors over the long-term.”
How Yatra Perceives And Plans Its IPO In India
According to an investor presentation accessed by Inc42, Yatra noted that with the IPO, it has the opportunity to leverage business media interest to improve B2C business. According to Yatra, the US-listed shares will continue to trade on NASDAQ, and the IPO in India has the potential to support the share price in the US while minimising the dilutive impact for existing shareholders.
It had already been made clear in the statement that Yatra wants to avoid over-dilution, and the investor presentation confirms the same sentiment. However, the offer still is a significant one.
Talking about the opportunities that an Indian IPO presents, the investor presentation noted that there was a chance to lower Yatra Online’s cost of capital, strengthen the balance sheet and fund investment. Also, Yatra will look forward to market consolidation; as it reckons the IPO will provide currency for potential equity funded acquisitions in India.
It said that while its India arm is ‘adequately funded’, the IPO will give it enough to invest in technology and corporate infrastructure, and step up its freight business.
Along with that, the presentation shared a timeline of events for the IPO. Yatra looks set to obtain a SEBI clearance by May 2022, file the Final Prospectus by late June or early July, gearing up for an IPO in mid-July 2022.
Yatra currently claims to provide real-time bookings for more than 94,000 hotels in India and over 2,000,000 hotels around the world. The startup has also further expanded its digital offerings in non-travel categories such as freight forwarding services.
According to a RedSeer report, Yatra held a 24% stake in India’s online travel market, second behind MakeMyTrip at 48%.
Traveltech Set To Make A Recovery
The travel industry has been the most impacted due to the Covid-19 pandemic, losing nearly three-quarters of its revenue that could amount up to INR 15 Lakh Cr. In 2019, travel and tourism accounted for more than $9 Bn of the global GDP or 10.4%; in the pandemic-hit 2020, it came down to 5.5% or a little more than $4 Bn.
According to a 2020 statement by the World Travel and Tourism Council, the pandemic could wipe off 50 Mn jobs across this industry, and Asia was expected to be the worst affected.
As the lockdown and restrictions are slowly lifting up, foreign tourism will still remain low, but domestic tourism is picking pace. While eco-friendly and sustainable tourism is one of the fastest-growing trends in the travel industry, workcations, road trips, and solo trips have increasingly become common among travellers.
According to a RedSeer report, India’s traveltech market is expected to grow to $125 Bn by FY2027.
