Online travel industry pegs deal at Rs 780 cr, largest so far in this space

South Africa’s multinational media firm Naspers, which runs online travel aggregator Ibibo in India, has acquired Bangalore-based online bus ticketing firm redBus.in. While Naspers declined to divulge the deal size, industry players have pegged it at over $130 million (approximately Rs 780 crore) making it the largest M&A in the Indian online travel and ticketing segment so far. Avendus Capital facilitated the deal.

Speaking to Business Line, Ashish Kashyap, CEO, Ibibo Group, said: “The growth in the online travel space has been impressive and with the acquisition of redBus.in, we are diversifying into bus ticketing, which has huge headroom. The transaction also makes us one of the largest players or even the leader in this space.”

It will help Ibibo expand and diversify its existing travel assets Goibibo.com ( a major B2C online travel aggregator) and TravelBoutiqueOnline (a B2B online travel platform for small and medium agents), he said.

On the changes in the structure of business, Kashyap said that redBus.in will continue to run independently, which means customers can book tickets on the Web site without going to Goibibo. The founders and management teams of each of these entities will continue to build their businesses, he added.

Founded by Phanindra Sama in 2006, redBus is the dominant player in the segment. It conducts transactions worth Rs 700-800 crore per annum, selling 10 million tickets. Its rivals include travelyari.com, abhibus.com and ticketvala.com. Even aggregators such as Makemytrip have ventured into this segment because of the huge opportunity.

Anand Lunia, Founder of venture capital firm IndiaQuotient, said the acquisition will definitely help redBus expand into markets in the North and East as the demand for bus travel is going up. Today, only 5 per cent of all bus ticket sales happen online and there is potential to grow ten-fold in the next 24 months. It has also created quite a buzz among bigger players such as Makemytrip, Yatra and Cleartrip. The industry expects some of the larger players to buy the smaller ones.

On valuations of the redBus acquisition, Lunia said: , “Given the strong brand redBus is, I expected about 1.5 times net turnover in valuation. However, it is a good deal for Naspers. redBus could have made more though.”

Requesting anonymity, an industry expert close to the development said “it was a very good deal”. So far the industry has seen smaller deals in the range of $5-10 million.

priyanka.pani@thehindu.co.in

(This article was published on June 21, 2013)
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