SUMMARY
Le Travenues Technology will be raising INR 1,600 Cr through IPO
It plans to invest at least INR 640 Cr for organic & inorganic growth
Plans to utilise not more than 25% of net proceeds for general corporate purposes
Le Travenues Technology, the parent company of online travel aggregator ixigo, has filed its DRHP and will be raising INR 1,600 Cr from the public market. The parent company will be issuing fresh shares worth INR 750 Cr and will allow offloading of shares from its existing investors to the tune of INR 850 Cr.
While ixigo joining the bandwagon of Indian tech companies like Paytm, CarTrade, MobiKiwk, Nykaa, and PolicyBazaar among others were speculated, the parent company’s conversion from a private company to a public company confirmed it. The company after bagging its Pre-IPO fund worth $53 Mn led by Singapore-based sovereign fund GIC, appointed six independent directors in its run-up to file DRHP. Ixigo, in its pre-IPO round, has also offered an 8X return to its early investor MakeMyTrip, which had invested $4.8 Mn in 2011.
Let us have a look at how Aloke Bajpai and Rajnish Kumar founded Le Travenues Technology plans to utilise its IPO proceeds.
Organic & Inorganic Growth
ixigo will be utilising at least 40% of its net proceeds, which is INR 640 Cr for funding organic and inorganic growth initiatives. The platform defines organic growth initiatives as discounts offered and other promotional incentives to attract new customers to its OTA platforms. Ixigo at present boasts of having 37.48 Mn monthly users and 2.44 Bn monthly screenviews. Organic growth initiatives further include sales, marketing, distribution expenses and investments in the development of technology infrastructure.
The 14-year-old company said that it will continue running promotions, offers and incentivisation schemes to encourage first-time bookers to book through its OTA platforms. The company said that it had offered discounts on flight and bus bookings pursuant to promotional offers, and also offered zero agent service charge on the first train booking for users on its train booking platform. The company also offers discounted travel products and services that are exclusive to users of ixigo mobile applications for limited periods to enhance mobile user engagement.
Le Travenues Technology has incurred expenses for discounts to the tune of INR 23.2 Cr in FY 21 as against INR 42 Cr it posted in FY 20. In terms of sales and promotion, the company burnt cash worth INR 8.6 Cr as against INR 16.8 Cr in FY 20. In FY 21, ixigo incurred a total of INR 49 Cr in expense against INR 27.5 Cr in FY 20 towards distribution cost.
In terms of technology infrastructure, the company has incurred expenditure worth INR 6.27 Cr in FY 21 as against INR 7.66 Cr in FY 20. In total, ixigo’s parent company has incurred a loss of INR 135.6 Cr in FY 21 as against INR 139.5 Cr in FY 20.
As of March 31, 2021, the cumulative aggregate number of downloads for ixigo-trains, ConfirmTkt and ixigo-flights combined, was 255 Mn. The number of transactions undertaken during Fiscal 2021 was 8.56 million.
The company defines inorganic growth as acquiring a company to complement its business offerings or that help them foray into newer markets. The company earlier in this year acquired a train discovery and booking startup – ConfirmTkt, and Hyderabad-based bus ticketing and aggregation platform AbhiBus. Ixigo intends to utilise up to to INR 35 Cr towards the acquisition of the remaining equity share capital of ConfirmTkt.
General Corporate Purpose
Apart from investing in organic and inorganic growth, ixigo intends to use not more than 25% of the net proceeds from the fresh issue for general corporate purposes. The company defines general corporate purposes as strategic expansion into new business lines such as in particular budget hotels and travel packages, funding growth opportunities, strengthening marketing capabilities and brand building exercises, meeting ongoing general corporate contingencies, and any other purpose, as may be approved by its board.
