India's biggest online bus reservation portal RedBus has been acquired by ibiboGroup, the company that runs Goibibo and TravelBoutiqueOnline.
ibiboGroup has executed a binding agreement to acquire redBus for an undisclosed amount, but some media outlets in India have put the price close to $138 million.
South Africa's Naspers owns 80% in ibiboGroup and the remaining 20% is owned by China's Tencent.
RedBus and ibiboGroup will continue to be run independently and operate as separate businesses.
RedBus was founded by Phanindra Sama, Charan Padmaraju and Sudhakar Pasupunuri in 2006. All founders and management team of redBus will continue to build out the businesses, the new owner says.
The company aggregates some 228,000 seats per day, sells over one million tickets a month and has more than 600 full time employees.
The core business model is commission revenues on transactions.
Phanindra Sama, co-founder and CEO of RedBus, says:
"We are excited to be a part of ibiboGroup. Naspers’ strong belief in internet industry and operating experience in multiple countries will help redBus grow into a renowned brand in the coming years."
Ashish Kashyap, CEO of ibiboGroup adds:
"Our key motivations to acquire redBus are: Strong management and founding team that will continue to run redBus as an independent operation.
"Second, significant leadership and market share of redBus in the online bus ticketing space.
"Third, this marriage leap frogs us to become an even stronger online travel player in India. This gives us significant combined scale in terms of daily transaction volumes and GMV.
"Lastly, we see this as an exciting market opportunity. Online penetration of the bus market is only 5.7% compared to 28% for air travel, suggesting headroom for rapid future growth"
RedBus has so far raised a total of $10 million in three rounds of funding from Mahesh Murthy's SeedFund, Inventus Capital Partners, Helion Venture Partners.
The company has rolled out key features recently including m-tickets and mobile boarding passes and virtual bus stops (users are able to see the location where the bus stops).
The acquisition triggers many questions, few are below:
- Will RedBus be integrated with ibiboGroup services?
- Goibibo, the OTA wing of ibiboGroup, has definitely strengthened its position in the Indian market with RedBus in its side, how will the other OTAs react to this?
- Will RedBus go beyond its Indian heartland with China's Tencent involvement? Note that Tencent recently launched its WeChat app in India, however it has found itself on the Indian government's radar for security reasons.