MakeMyTrip Limited (MMYT) has announced a fresh sale of equity shares on NASDAQ; according to the prospectus filed with the United States Securities and Exchange Commission (SEC), the offering may be of up to 6.9 million shares, and at a maximum of $26.22 per share, this would amount to up to $180,918,000. When we last checked,the price of MMYT shares stands at $24.44( down 1.29%) at the end of day on May 26, 2011. Morgan Stanley and Deutsche Bank Securities Inc. Pacific Crest Securities LLC and Oppenheimer & Co. Inc. will underwrite the listing where Pacific Crest and Oppenheimer will act as co-managers.
Who Is Selling, And How Much
Of the shares that will be offered to the public, 1,600,000 ordinary shares (worth $39,104,000 at current rates) will be sold by MMYT, 4,400,000 ordinary shares (worth $107,536,000 at current rates) will be sold by other shareholders, and there is an an over-allotment option for up to 900,000 ordinary shares (worth $21,996,000 at current rates). In total, at current rates, the offering could amount to $168,636,000. So, who, among MMYT’s key shareholders, is selling? According to the prospectus:
– SAIF Partners: is selling 3,034,800 shares (worth $74,170,512 at current rates). The shareholding of SB Asia Investment Fund II L.P. will come down to 31.54% of the issued and outstanding shares of the company, from its current shareholding of 41.68%
– Helion Venture Partners: selling 707,805 shares (worth $17,298,754.2 at current rates). Its shareholding will come down to 7.36%
– Management: Founder Keyur Joshi is selling 99,776 shares (worth $2,438,525.44 at current rates), and his shareholding will come down to 0.5% post the offering. MMYT CFO Rajesh Magow is selling 59,880 shares (worth $1,463,467.2 at current rates), and his shareholding will come down to 0.91% post the sale. Update: forgot to add, Deep Kalra is selling 497,739 shares, following which, his stake will come down to 9.43%.
Note that post the sale, the shareholding of MMYT Founder Deep Kalra will come down to 9.43%. Tiger Global is also not selling any shares, but its shareholding will come down to 11.23%, from 11.77%
Last year, the company had raised $70 million selling 5 million shares, in a blockbuster IPO, wherein it crossed the $1 billion market cap mark within 4 days.
Utilization of Capital
From the funds it receives from the sale of its shares, MMYT intends to expand operations, upgrade its technology, for working capital and other general corporate purposes. It also plans to invest the net proceedings in short-term, interest-bearing bank deposits or money market funds.
Remember that MMYT also may buy out the remaining shares in Singapore based Luxury Tours & Travel Pte Limited (LTT), a company which it acquired a 79% stake in for around $3 million; the earn-out period is over three-years, ending June 2014, and the company will allow MMYT to expand into the South East Asian market.
In its prospectus, the company also says that its technology platform is able to handle up to 500,000 website requests per day, and it requires hardware investment of $360,000 to increase the capacity to 1.0 million website requests per day.
For the whole year,MakeMyTrip reported a profit of $5.12 million, as compared to $1.44 million for the last year.The company’s net revenue for Fiscal 2011 was $61 million, an increase of 51.6% from FY10′s net revenue of $40.2 million. The company registered gross bookings of $742.5 million for the financial year FY11, an increase of 59.4% as compared to last year.Air Ticketing Transactions witnessed a growth of leading to a 58.6% growth in gross bookings, while Hotels & Packages transactions increased by 60.3% year on year, resulting in a 65.2% growth in gross revenue from this segment.
Notes from the Prospectus:(view the Prospectus here )
– Air Ticketing Business: For MMTY, the total number of transactions for inbound air travel to India were 47,765 in fiscal year 2011. This an increment of 11630 as compared to last year figures. MMYT reports that during FY-11 over 95.0% of their sales of air tickets for travel in India and the majority of sales of air tickets for outbound travel from India were made through its website. Interestingly enough, sales of air tickets for inbound travel to India tend to be made mainly through its call centers, with our call centers accounting for approximately 63.8% of such sales. In FY-11 MakeMyTrip’s transactions through websites, call centers and travel stores accounted for approximately 95.9%, 3.3% and 0.8%, respectively, of total transactions.
– Hotels and Packages Business: The total number of transactions in their hotels and packages business were 175,869 in fiscal year 2011. This is a significant growth as compared to last year figures which were $8.0 million. MakeMyTrip has nearly 4500 hotels in their inventory and about 2.1% of the hotel suppliers were directly- connected through their booking system.
– India Revenue: For the year ended on 31st March, the revenue generated in India stands at $115,753,388 and in US it is $8,967,999.
– Advertising Revenue: The revenue generated by MMYT from advertising in FY11, was $578,284. This is up from $372,442 the previous fiscal.
– Car Hire: The company launched Car Hire facility in May 2010 using which subscribers can rent a chauffeur driven car within India through their call centers and travel store. Currently, this service is available for flight transfers in five cities in India (Delhi, Mumbai, Hyderabad, Ahmedabad and Bangalore), and MMYT intends to further expand their coverage to all major cities in India.
– Rail Ticketing: The company has a pact with IRCTC since 2009 which allows the users to book tickets directly from makemytrip.com. According to the prospectus it has booked 576,585 transactions for rail tickets in 2011.
– Bus Tickets: It has collaborated with various Indian Bus Operators, aggregators and several intermediaries to facilitate online booking.The company reports that it has booked 147,640 transactions for bus tickets for the fiscal year 2011.
-Canada Operations: It recently launched makemytrip.ca.The company is evaluating the transfer of legal ownership by September 2011.The website is currently managed by a Canadian company that they had previously registered.
– Mobile: Recently introduced makemytrip.mobile,which is available for BlackBerry has been downloaded 35000 times as of March 2011.Customers with reserved tickets, whether booked through a desktop computer or mobile device, have the ability to access flight information or cancel reservations through this application.The Iphone and Android versions of this application will soon be launched. No details of mobile transactions, though.
– Trademarks: MMYT is in the process of acquiring copyright protection for their logo and brand name in India.They are in the middle of obtaining the trademark over TicketVala, “Luxury Tours & Travel” and EBusXpress.
– Government License: It is seeking license to operate inclusive tour package tourist charter flights as part of the holiday packages.The company is already in talks with Directorate General of Civil Aviation, Government of India.