China’s internet giant Tencent and South Africa’s media powerhouse Naspers are doubling down on tech in India. TechCrunch has just found out that Ibibo, their domestic joint venture, has acquired redBus.in, a Bangalore-based online bus ticketing company that has become a dominant and disruptive force in how people travel in the country.
Ibibo’s CEO and founder, Ashish Kashyap, tells us that the terms of the deal are not being disclosed, but there have been rumors of an acquisition in the works for some time, with prices in the region of around $135 million. The acquisition is interesting not only because it signals more activity for Ibibo, which is 80 percent owned by Naspers and 20 percent by Tencent, but also raises questions of whether the two plan to take Redbus’s platform and business model to new markets, like China for example.
Kashyap confirmed to TechCrunch that the company will keep Redbus running independently and operating as a separate business. It plans to bring Redbus into its existing travel portfolio which includes a B2C travel aggregator, Goibibo.com, and TravelBoutiqueOnline, a B2B travel agency platform.
He also reiterated that Phanindra Sama, the co-founder and CEO of Redbus, will be staying on and running the business under the new owner. “Yes. Absolutely. He is going to continue to participate with me and continue his role as the CEO of Redbus.”
Rumors have been swirling for the past week on Redbus’ acquisition, since a NextBigWhat report quoted a source saying a buy-out was on the cards for an estimated $135 million (800 crores).
Again, we don’t have details on the final sale price, but there are a number of signs of the company growing fast. Since the company’s founding in 2006, Redbus has shot past the 2 million user mark, and last year hit 10 million in ticket sales, using a combination of online reservations with confirmations delivered via SMS, usable across handsets in this feature-phone-dominated market.
It employs more than 600 staff, and sells more than a million tickets each month, across daily listings of 228,000 seats. It takes a commission from bus operators upon successful transactions.
If the $135m figure is accurate, it looks like a healthy exit for the copany. Bangalore-based Pilani Soft Labs, the formal name of the holding company that owns Redbus, raised a Series A round from Seedfund of $1 million. A Series B from Seedfund and Inventus Capital Partners in 2009 was for $2.5 million, and in 2011, Helion Venture Partners led a Series C to raise $6.5 million. Invenus and Seedfund came in for that latest round, as well.
As Drew pointed out when he visited Redbus in February, the company has been one to watch. Its chief product officer, Alok Goel, is an ex-Googler who approaches the business of organizing how people find and pay for bus tickets to a new level of big data. You can see how this model could be subsequently applied to the same situation further afield, or to different problems altogether.
If that is a problem that ambitious Redbus—and now its ambitious owners Tencent and Naspers—want to tackle, it could be some time before that happens. “The Indian online bus market itself is under penetrated at less than 6 percent,” Kashyap told TechCrunch. That means more room to grow at home first.
There is also the case with platforms. For now the majority of Redbus busines is online; the company only really started to make a push on mobile in February. With India as one of the world’s fastest-growing smartphone markets at the moment, this could present a new spurt of growth and opportunity for the company. IDC estimated that only 2.5 percent of mobile phones in the country were smartphones in 2012.
Tencent has also been keen to get in the Indian market. In July last year, it launched its mobile messaging app, WeChat, in India through Ibibo. When I visited its offices in Shenzhen earlier this year, the company spoke about how it conquered the domestic social networking scene, and its plans on expanding to more Asian countries. It’s started releasing TV ad campaigns in some of the countries in the region, and we can expect the company to continue to push its products in India.
Ibibo is owned by Naspers’ online media arm, MIH. Last year, MIH led a Series D round of $150 million in funding in Bangalore-based e-commerce company, Flipkart. MIH also won a board seat on Flipkart as a result of the funding. Flipkart sells a wide variety of consumer products such as books and apparel. The acquisition of Redbus could have it start cross-selling bus tickets on the site to the growing numbers of Internet-connected Indians.
Naspers has also declared it will up the ante on e-commerce, as online businesses grow for it in its home country of South Africa and abroad. Naspers chairman, Ton Vosloo, said during the company’s November 2012 earnings call that it is starting to place increasing focus on selling online. Last year, it acquired a majority stake in eMag, one of the biggest e-commerce sites in Romania. It also has a minority stake in Souq.com, an e-commerce portal in the Middle East, and bought 70 percent of Turkish shopping site, markafoni, in 2011.