NEW DELHI : Financial investors Elevation Capital, Sequoia Capital and Fosun International will get at least 27% returns on travel app ixigo’s initial public offering (IPO), reveals VCCircle analysis. The ₹1,600 crore IPO, for which draft papers were filed recently, will multiply the decade-long investment of venture capital and growth equity firm Elevation Capital (previously SAIF Partners) by about 12 times.
Elevation Capital (formerly SAIF Partners), the largest and oldest investor in the company with 23.97% stake, had invested over ₹64 crore back in 2011. It is now looking to sell shares worth up to ₹550 crore in the IPO, which will result in its partial exit from ixigo. The IPO would, thus, value its stake at ₹700-760 crore, giving it a 27-28% annualized return, according to VCCircle analysis.
In the case of Sequoia, the IPO will multiply the investment firm’s five-year bet by about 7.5 times, valuing it at about ₹500 crore. India’s most active venture capital investor Sequoia, which had invested about ₹67 crore back in 2016, will get over 50% annualized return going by the IPO pricing. Also, the IPO will bump up Chinese conglomerate Fosun’s ₹33.5 crore investment of 2017 by 3.5 times to over ₹115 crore, which means an annualized return of about 33%.
Sequoia and Elevation Capital did not respond to queries till press time, while Fosun could not be reached.
Ixigo recently filed draft papers for the IPO. In July, the company raised ₹270 crore as part of a pre-IPO round led by Singapore sovereign wealth fund GIC.
The pre-IPO round assigned an equity valuation of about ₹2,900 crore to ixigo. According to VCCircle estimates, the company could be chasing a post-money equity valuation of about ₹4,000 crore in the IPO.
Ixigo, run by Gurugram-based Le Travenues Technology Ltd, was founded by Aloke Bajpai, Dharmendra Yashovardhan, and Rajnish Kumar in 2007. The travel app, which swung back to profits in the last financial year, did some shopping of late to make its IPO attractive to investors. It acquired Confirmtkt in February 2021 and AbhiBus this month.
Ahead of the IPO, the company has seen growth in key metrics. For example, its gross transaction value grew at a compound annual rate of 135% between 2018-19 and 2020-21. Also, net sales for 2020-21 grew 21% despite the pandemic which had hit travel and hospitality real hard.
Moreover, the company, which enables travellers to book train tickets, flight tickets, bus tickets, hotels and cabs, saw the number of passengers bouncing back in the second half of the last financial year.
Ixigo earns revenue through commissions, convenience fees, agent service charges, payment gateway charges, Ixigo assured fees apart from advertisements that are impression-based or click-based. "We are the largest Indian OTA (online travel agency) in the online train bookings segment and our train-centric mobile applications, ixigo trains and ConfirmTkt were collectively the leading B2C (business to consumer) distribution platforms for IRCTC (Indian Railway Catering and Tourism Corporation) with 42% market share in terms of rail bookings among OTAs and B2C distributors of IRCTC in fiscal 2021," the firm said in the draft papers.
Ixigo’s AbhiBus was the second-largest bus-ticketing app in India, with a tenth of the market and the third largest flight booking portal in India having a market share of 12% at the end of last fiscal, as per consultant Frost & Sullivan.
Ixigo competes with MakeMyTrip, Yatra, Cleartrip and Easy Trip Planners in the domestic OTA market. Peers in the online rail booking segment are Paytm, Amazon, Railyatri, MakeMyTrip and Goibibo. AbhiBus competes with redBus and Paytm.
