$330 Million Funding: MakeMyTrip Currently On The Crest Of A Wave

In what is touted as the biggest funding round in the country’s online travel space, MakeMyTrip has raised a whopping $330 million. MakeMyTrip has been on a roll for over a year now, with funding pouring in from Ctrip, followed by the completion of the merger with Ibibo group.

All About The Massive Round Of Fundraising:

Source: Business Standard

What Are The Plans For The Money Raised?

This round of funding is raised through a share sale and issuing fresh stock to the already existing investors Ctrip and Naspers. In addition to offering 4,583,334 ordinary shares to investors at $36 per share, MakeMyTrip is also issuing 916,666 ordinary shares to Ctrip and 3666,667 Class B shares to MIH Internet SEA Pte. Ltd, a subsidiary of Naspers, at $36 per share. This makes up the $300 mn in funding that MakeMyTrip has raised. This comes as the second big round of funding for MakeMyTrip after the $180 million put in by Ctrip, last January. Morgan Stanley India is overseeing the as the transaction.

The money raised in this round of funding is said to be used in expansion, product and technology development, strategic investments, marketing, and promotions. Given, the intention of MakeMyTrip to go after the online hotel distribution space, many research analysts are suggesting that the fund will be utilized in this space.

Deep Kalra, group CEO, MakeMyTrip had this to say following the results after their merger with ibibo,

“We are now well poised to further accelerate the shift towards online bookings for the largely offline hotels market in India”

In the last fiscal year (i.e. 2016) alone, MakeMyTrip has completed around 34 million transactions of which 50% came from RedBus, an ibibo group acquisition.

Where Will The Focus Be?

Source: Economic Times

The budget hotel space is highly competitive with the likes of international players like booking.com and Expedia introducing a plethora of services country-wide. To top it off the home-grown companies like Paytm (backed by Alibaba group), Oyo Rooms, Treebo Hotels are entering the fray, making things difficult for MakeMyTrip. This is where the $500 million reserve will come into effect.

Reports suggest that the hotel space contribute about 20% commission while flight bookings provide 6%, thus making hotel bookings, the more attractive option. The company has made its intentions clear as Kalra had this to say about the budget hotel segment,

This won’t become a bed of roses overnight,” Kalra said. “There will always be players, Indian or international, throwing their hat in, and hoping to get a piece of this very lucrative pie.

You can get the best deals and offers on flight and hotel bookings using MakeMyTrip, through GrabOn.

Originally published at https://www.linkedin.com on May 9, 2017.