Ebix to acquire Indian travel company Yatra for $337.8M

Atlanta-based software firm Ebix said today it is acquiring Indian online travel booking company Yatra through a merger deal at an enterprise value of $337.8 million as it looks to strengthen its position in India’s hotel and flight ticketing market.

Once the acquisition has completed, Yatra will become part of Ebix’s EbixCash (the company’s Indian subsidiary) travel portfolio — which also includes Via and Mumbai-based Mercury — and will continue to serve customers under the Yatra brand, the two companies said. Ebix had invested north of $650 million in businesses in India, one of its key markets today, prior to the deal.

Yatra, which went public in 2016 following a reverse-merger with listed company Terrapin 3 Acquisition Corporation, counts India’s Network18, Reliance Capital, Macquarie Group and Rotation Capital among its shareholders.

Yatra, which posted a revenue of $31.7 million in Q4 2018, has over 800 corporate clients. The acquisition would allow it to pose a bigger challenge to MakeMyTrip, a local player that currently leads the market. It consolidated its market lead in India after buying its competitor Ibibo in 2016. In 2017, MakeMyTrip raised $330 million from Naspers and Ctrip. Thanks to a deal between the two investors earlier this year, China’s Ctrip now owns 49% of MakeMyTrip.

EbixCash, which has over 9,000 employees, posted an operating income of $41.5 million in Q4 2018, with a profit of $8.5 million. Ebix develops software solutions for insurance, financial, e-commerce, e-learning, healthcare and travel industries, and has established over 110,000 distribution outlets and amassed over 8,000 corporate clients.

The combined Yatra-Ebix entity will leverage Yatra’s large and loyal existing customer base, comprehensive service offering and multi-channel platform to take advantage of the dynamic and growing multibillion-dollar opportunity in India, the companies said in a joint statement. Yatra’s shares were up over 17% following today’s announcement in pre-market trading.

Travel has emerged as one of the fastest growing categories in India’s internet economy. In a presentation earlier this year, Yatra said the travel segment is on track to grow to $85 billion by 2022, with online platforms accounting for 45% of all transactions.

The companies said their board of directors have unanimously approved the deal and they expect to close it by the fourth quarter of this year. In a statement, they added, “Assuming a value of $4.90 per Yatra ordinary share, the transaction implies an enterprise value of $337.8 million at the Ebix collar price of $59 per share and post adjustment for indebtedness, working capital, warrants to be converted and minimum cash requirement, a net equity value of $239 million.”

Ebix’s growing footprint in India

The announcement follows months-long negotiations between the two firms. In March, Ebix offered to buy Yatra for $336 million, adding that it might reduce its offer size if Yatra does not accept the proposal soon enough.

Ebix said it is targeting an EbixCash IPO in the second quarter of next year. “The synergies and the cross-selling opportunities can create tremendous economic value for the shareholders, once the IPO is done,” the companies said.

Ebix owns stake in a number of companies in India. Earlier this year, it acquired 80% controlling stake in on-demand SaaS travel firm Zillious. The U.S.-based company’s Indian subsidiary has also acquired stakes in remittance provider Weizmann, online cab hiring platform AHA Taxis, B2B marketplace Routier, travel business Centrum Direct and e-learning firm Smartclass.

In 2017, Ebix acquired controlling stake in Itz Cash, a firm that offers prepaid cash cards, for over $120 million. It also owns assets in Delhi-based Pearl International Tour & Travels and Mumbai-based Lawson Travels & Tours.

Additionally, Ebix has claimed that it owns about three-quarters of the market share of foreign exchange sales at 32 international airports in India.

In a statement, Dhruv Shringi, co-founder and CEO of Yatra, said, “Becoming a part of Ebix’s EbixCash travel portfolio will enable us to continue on that path. As part of a larger diversified organization with the necessary scale and resources to be a leader in today’s dynamic travel marketplace, we will provide more options and an enhanced experience for our joint customers and will be an even stronger partner to the airline, hotel, car rental and other businesses we work with.”

“We are confident that combining Yatra’s loyal customer base, comprehensive service offering and multi-channel platform with Ebix’s complementary Via and Mercury businesses, will create a leading online travel platform and India’s largest corporate travel platform that will capture growth opportunities and deliver enhanced value to shareholders.”