India's MakeMyTrip has announced a share placement and purchase agreement which will net the business gross proceeds of $330 million.
The money raised "will be used to fund business expansion, strategic investments, technology and product development, marketing and promotions, working capital and general corporate purposes."
There are two components to the financing - $165 million coming from the placement of ordinary shares at a cost of $36 a share with unnamed investors, and the same amount coming via a purchase deal involving existing investors Ctrip and Naspers.
The ownership structure of MakeMyTrip is likely to change as a result. Ctrip invested $180 million in MakeMyTrip at the start of 2016, and got a place on the board as a result.
In October of the same year MakeMyTrip merged with Indian rival Ibibo Group, which was at the time backed by Naspers with China's Tencent also having a small stake in Ibibo.
This meant that at the time, the combined MakeMyTrip/Ibibo was 50% owned by MakeMyTrip, 40% by Naspers/Tencent and 10% by Ctrip.
Of more immediate interest perhaps is the fact that India's biggest OTA, having taken over one of its main competitors in Ibibo Group, has raised a significant amount of cash to invest further. Ctrip has experience in China of strengthening from a position of strength by buying significant stakes in or merging with competitors, and it looks as if MakeMyTrip is now in a position to adopt a similar approach.
Its biggest competitor in India at the moment is Yatra, also listed in the US. At the time of writing, Yatra's market capitalization is around $313 million.
Related reading from Tnooz:Pivotal moment in 2016 – when MakeMyTrip merged with Ibibo (Dec16)
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