RateGain Gets SEBI Nod For IPO, Aims To Raise INR 400 Cr Via Fresh Issue

The Securities and Exchange Board of India (SEBI) has approved the initial public offering (IPO) of travel tech startup RateGain.

The Noida-based travel and hospitality software-as-a-service (SaaS) startup filed its draft red herring prospectus (DRHP) in August 2021. Its offer includes a fresh issue worth up to INR 400 Cr and an offer for sale (OFS) of up to 22,605,530 shares.

In the OFS, private equity firm TA Associates, will offload up to 1,71,14,490 shares for sale through its associate Wagner. RateGain founder and CEO Bhanu Chopra will be offloading 40,43,950 shares. 

With SEBI’s approval, RateGain has joined a number of tech-backed startups which are on their way to hit the public markets.

The founder’s family members Megha Chopra and Usha Chopra have offered to sell up to 12,94760 and up to 1,52,330 equity shares.

Promoters hold a majority stake in the startup, at around 68.35%. Bhanu Chopra holds 50.34%, while his family members Meghna Chopra and Usha Chopra have an ownership of 16.12% and 1.90% respectively.

Wagner, on the other hand, holds 16.13% stake in the company.

In its draft prospectus, RateGain said that it plans to use the proceeds of the fresh issue primarily to repay a loan taken by RateGain UK from Silicon Valley Bank worth INR 86.4 Cr.

Further, the company will use INR 26.2 Cr of the proceeds in deferred consideration for the DHISCO acquisition from 2018.

It will also look to invest INR 80 Cr towards strategic investments, acquisitions and inorganic growth and INR 50 Cr for technology innovation, artificial intelligence and other organic growth initiatives, as well as data centre enhancements worth INR 43.3. Cr.

For the last financial year (FY21), the NCR-based startup reported a net loss of INR 28.57 Cr, 42% higher than INR 20.10 Cr of net loss registered in FY20.

Its revenue from operations fell 37% to INR 250.79 Cr in FY21, compared to INR 398.71 Cr reported in FY20.

Founded in 2004 by Bhanu Chopra, RateGain offers a SaaS product targeted at travel and hospitality companies to help them streamline operations and sales. 

The startup enables these businesses to determine the right pricing for their products based on the demand, the current market rates and more to help hotels and booking agents maximise revenue. The company’s pricing decisions are based on the prices set by competitors or other hotels in the vicinity. It also provides hotels information on what people are saying about their property or concept online.

Paytm is the latest new age company to get listed, although at a discount. On November 18th, Paytm made its stock market debut and got listed at a discount of over 9% from its issue price of INR 2,150, raising questions over the fate of other tech backed startups raring to go public.

Prior to Paytm’s listing, Nykaa and Fino Payments Bank got listed with the former witnessing a bumper listing, while Fino listed with a discount of over 5%.

Fintech major MobiKwik has reportedly delayed its IPO amid fall in valuations and hospitality unicorn OYO is yet to get the Securities and Exchange Board of India’s (SEBI) green signal to offer their shares to the public.

Further, RateGain, when listed, will join travel tech major — Easemytrip and MakeMyTrip — in the public markets. While Easemytrip listed on the domestic bourses, BSE and the National Stock Exchange in March this year, MakeMyTrip debuted on the NASDAQ in the US way back in 2010.

Another online travel service provider Ixigo is awaiting SEBI’s nod for is INR 1,600 Cr IPO.