New Delhi, June 17 -- Online travel aggregator MakeMyTrip plans to raise more than $2.5 billion through an offering of ordinary shares and convertible notes to buy back part of the stake held by Chinese company Trip.com Group Ltd, its largest investor.
Trip.com, an online travel service provider that owns multiple companies including trip.com and skyscanner.com, currently owns total voting rights of 45.43% in MakeMytrip through ordinary shares and Class B shares.
Nasdaq-listed MakeMyTrip is aiming to raise up to $1.25 billion through an issue of convertible senior notes, a short-term debt instrument, which would be due 2030.
It will also issue 14 million ordinary shares in the primary offering, which at the current share price could fetch anywhere between $1.26 billion and $1.4 billion.
The company also said it will grant its underwriters an option to issue another 2.1 million shares and give initial buyers of its notes a 13-day option to purchase up to an additional $187.5 million in aggregate principal amount.
This means that the company could end up raising nearly $3 billion if it exercises both the overallotment options.
MakeMyTrip's shares slumped nearly 13% in pre-market trading on Tuesday after the announcement. It currently commands nearly $11.07 billion in market capitalization. Trip.com, which is also listed on the Nasdaq, is valued around $39 billion.
Separately, Trip.com said it will remain MakeMyTrip's largest shareholder after the buyback. "This is part of the company's efforts to optimize its investment portfolio and enhance shareholder returns. Following completion of the proposed repurchase, the company will remain the largest minority shareholder of MakeMyTrip and continue to support the growth of MakeMyTrip," Trip.com said in a statement.
Trip.com had first invested in MMT in 2016, infusing nearly $180 million through convertible bonds through its entity ctrip.com. In 2017, it acquired trip.com (formerly known as Gogobot) and rebranded to trip.com in 2019 to focus on international expansion.
The same year, along with Prosus (previously Naspers), it invested $330 million in MakeMyTrip. Later, in 2019, the South African firm sold its stake to trip.com taking the Chinese firm's shareholding to about 49%.
MakeMyTrip's share price has jumped by more than five times in the last five years, in what is likely a neat return for Trip.com.
The Indian company, which has been listed on the Nasdaq stock exchange in the US since 2010, competes with Mumbai-listed peers EaseMyTrip and Yatra among others. It runs multiple travel platforms including MakeMyTrip, Goibibo and redBus, allowing customers to research, plan and book a wide range of travel services and products in India and overseas.
Published by HT Digital Content Services with permission from VC Circle.