Online travel firm Yatra plans to sharpen its focus on smaller cities and mobile technology for expansion, as it charts out a growth strategy after listing its shares in the US following the completion of a reverse merger with Terrapin 3 Acquisition Corp.
Yatra Online Inc., which operates Yatra.com through its India unit, listed its shares on the Nasdaq stock exchange on Monday at $10 apiece under the ticker symbol YTRA. At this price Yatra expected a market value of $355 million, it said in an investor presentation in November. The stock will begin trading in a day or two, a spokesperson said.
In a conversation with Techcircle a few hours before the listing, Dhruv Shringi, co-founder and chief executive of Yatra.com, said that the listing will deliver long-term sustainable growth for the company.
Yatra had in July entered into a reverse merger agreement with US-based blank cheque firm Terrapin, which was already listed on the Nasdaq, paving the way for a back-door listing of Indian online travel firm in the US.
As part of this merger, Yatra raised $92.5 million of primary capital from global investors. Shringi will continue to lead the merged entity, Yatra Online.
He said the company will use the capital to expand its presence in tier II and tier III markets, where aviation is beginning to establish a foothold, and to enhance mobile technology. “The deployment of capital will begin next quarter,” he said.
The listing was delayed by nearly a month, which Shringi said was due to the multiple jurisdictions involved to complete the merger.
Yatra joins bigger rival MakeMyTrip on the Nasdaq. MakeMyTrip had gone public in August 2010 through an initial public offering. MakeMyTrip was valued around $480 million prior to its listing, but a surge in its stock price has propelled its market capitalisation to $1.25 billion currently.
Growth prospects, consolidation
Shringi is bullish about Yatra’s growth prospects in India, where he says the travel sector is growing faster than the overall economy.
“Our GDP is growing robustly and the growth rate is strong as compared to the rest of the world. The travel sector will grow at least one-and-a-half times to two times the rate of GDP growth. We are placed strong and now we have a balance sheet that enables us to invest more actively,” he said.
Shringi ruled out any acquisition or consolidation plans anytime soon and said that Yatra is focused on building strong fundamentals and long-term relationships with its customers.
“You don’t build a business with consolidation in mind. When you build a business, you build it around the fundamentals of the business model. If we are fundamentally strong and an opportunity comes your way you would evaluate that… We are not looking actively at acquisition opportunities as of now,” he said.
Shringi also said that Yatra’s online hotel aggregator, TravelGuru, helps in maintaining loyalty among customers and will remain as a standalone entity. He also ruled out any top-level management changes in the company after the listing.
Yatra says it has India’s largest network of 61,000 hotels and more than four million customers on its platform.
The company had previously raised capital in tranches from investors including Norwest Venture Partners, Network18, Reliance Capital’s PE arm, Intel Capital, Valiant Capital, InnoVen Capital, IDG Ventures and Vertex Venture Management, the VC investment arm of Singapore’s sovereign wealth fund Temasek.
In October, VCCircle had reported that Yatra will issue a small equity stake to Reliance Industries Ltd as part of a business arrangement. The tie-up involves Yatra’s mobile app being pre-installed on up to 35 million Reliance Jio LYF smartphones over three years as Reliance launches its 4G mobile networks, the company said in its presentation to investors in November.