RateGain IPO Opens, Retail Portion Subscribed 97% In First Hour

The initial public offering of NCR-based travel tech startup RateGain opened today (December 7th, 2021) and has so far witnessed strong interest among retail investors.

The offer which will continue till December 9 opened at the price band of INR 405 – INR 425.

The offer includes a fresh issue of shares worth INR 375 Cr and an offer for sale (OFS) of up to 2,26,05,530 shares. Shares worth INR 5 Cr have been reserved for the eligible employees.

• Retail institutional investors (RII) have been the only major subscribers so far. By 11 a.m, they subscribed to 30,24,490 shares out of the 31,31,141 shares allocated for them, thereby booking 97% or 0.97 times of the earmarked portion.
• Employees have placed bids for 1,295 shares (1% or 0.01 time), out of the 1,29,870 shares reserved for them
• Non institutional investors (NII), which include corporates and individuals (other than RIIs) have so far bid for just 3,010 shares, while the allocated portion consists of 46,96,711 shares
• Qualified institutional buyers (QIB) are yet to pitch in. They have been allocated 93,93,424 shares
• In total, during the first hour of the offer, the IPO has been subscribed 17% of or 0.17 times. According to data on the BSE website, bids have been placed for 30,28,795, out of the total 1,73,51,146 shares on offer.

Anchor Investment

On Monday, RateGain raised INR 598.83 Cr in the anchor investment round by allocating 14,090,136 equity shares to 30 anchor investors at the upper price band of INR 425 per equity share.

Some of the key anchor investors were the Government of Singapore, Monetary Authority of Singapore, Nomura, ICICI Prudential Mutual Fund, SBI Life Insurance, Nippon Mutual Fund, Pinebridge, Axis Mutual Fund, Birla Mutual Fund and ICICI Prudential Life Insurance.

The Government of Singapore has invested nearly INR 70 Cr while the Monetary Authority of India has invested INR 15.10 Cr.

RateGain’s Offer For Sale

• Private equity firm TA Associates will offload up to 1,71,14,490 shares for sale through its associate Wagner 
• RateGain founder and CMD Bhanu Chopra will be offloading 40,43,950 shares 
• The founder’s family members Megha Chopra and Usha Chopra, have offered to sell up to 12,94,760 and 1,52,330 equity shares respectively.

Promoters hold a majority stake (68.35%) in the startup including 50.34%, 16.12% and 1.90% stake held by Bhanu Chopra, Meghna Chopra and Usha Chopra respectively.

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

Utilisation Of the Net Proceeds

As per the RHP, RateGain will use INR 85.26 Cr to repay a loan taken by RateGain UK from Silicon Valley Bank. Further, it will use INR 25.2 Cr of the proceeds in deferred consideration for the DHISCO acquisition from 2018.

The company has proposed to allocate INR 40.77 Cr to purchase capital equipment for its data centre.

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.

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

For the last financial year (FY21), the Delhi 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.

Its clientele includes InterContinental Hotels, Lemon Tree Hotels, The Kessler Collection and another IPO-bound travel unicorn OYO Hotels and Homes.