Yatra eyes a corpus of Rs 150 crore for acquisitions as it readies for listing

Yatra Online, which is India’s largest corporate travel services provider in terms of number of corporate clients, is preparing a corpus of Rs 150 crore for its inorganic growth plans that includes strategic investments and acquisitions. 

The online major, which was the third largest online travel company in India—behind Easy Trip and MakeMyTrip—in FY23 among key OTA players in terms of gross booking revenue and operating revenue, will create the corpus from the proceeds that it will receive from its initial public offer (IPO), which opens for subscription on September 15. 

Speaking to Business Today on the sidelines of the press conference, Co-founder & CEO Dhruv Shringi said historically the company has acquired entities that have a strong offline presence that can complement the existing online model of the travel major. 

“Historically we have looked at some acquisitions on the offline travel side. People who maybe have a strong customer base but not a technology solution,” said Shringi, who co-founded the company in 2006. 

“So, by acquiring entities like that at a reasonable price we are able to put in place technology, significantly improve the operating margins of those businesses. And also change the relationship that is there with the customer… a technology-led more long-term relationship. That would be one endeavour. The other is that we are looking for add-on products and services that can be bolted on and sold into a corporate customer base,” added Shringi. 

Incidentally, the draft red herring prospectus (DRHP) of the public issue mentions that the company plans to use Rs 150 crore from the net proceeds of the IPO for acquisitions and strategic investments. 

“We intend to utilise Rs 1,500 million (Rs 150 crore) from the net proceeds, towards such potential acquisitions and strategic initiatives,” stated the DRHP. 

The draft document has, however, clarified that the company has not yet identified specific entities for acquisitions. 

“As on the date of this Red Herring Prospectus, we have not identified any potential target for investment or acquisition and had not entered into any definitive agreement for which it intends to utilize Net Proceeds of the Fresh Issue,” stated the DRHP. 

“The potential targets include a wide range of geographically dispersed online travel companies that maximize revenue through, acquisition, retention and wallet share expansion for its customers. Such potential targets would ordinarily be in the online travel, freight business, freight and travel technology space and targeted to clients ranging from SMEs to Mid-market and Global enterprise segments. These targets are mostly located in geographies where our target clients are based primarily in India,” it added. 

Meanwhile, the company has set a price band between Rs 135 and Rs 142 per equity share for its IPO. The IPO will close for subscription on September 20. 

The company is looking to raise a total of Rs 775 crore, which includes a fresh issue worth Rs 602 crore and an offer-for-sale (OFS) of 1.22 crore equity shares by promoter THCL Travel Holdings Cyprus and selling shareholder Pandara Trust- Scheme I, aggregating to Rs 173 crore. 

While Rs 150 crore would be used for strategic investments, acquisitions, and inorganic growth, an amount of Rs 392 crore from the issue proceeds has been earmarked for investment in customer acquisition and retention, technology, and other organic growth initiatives and general corporate purposes. 

SBI Capital Markets, DAM Capital Advisors and IIFL Securities are the book running lead managers for the public issue.

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