Forbes India 15th Anniversary Special

Yatra to list on Nasdaq after reverse merger with Terrapin 3 Acquisition

The multi-phased deal values Yatra at an enterprise value of $218 million

Deepti Chaudhary
Published: Jul 14, 2016 02:13:12 PM IST
Updated: Jul 14, 2016 08:02:52 PM IST
Yatra to list on Nasdaq after reverse merger with Terrapin 3 Acquisition
Online travel firm Yatra Online Inc has entered into a merger agreement with Terrapin 3 Acquisition Corp

Online travel firm Yatra Online Inc has entered into a merger agreement with Terrapin 3 Acquisition Corp, a Nasdaq listed special purpose acquisition firm, the two firms said in a statement on Thursday. The multi-phased deal values Yatra at an enterprise value of $218 million.

Terrapin 3 Acquisition is a special purpose acquisition company formed for the purpose of effecting a merger, acquisition, or similar business combination. Yatra will be the surviving company in the transaction and intends to be listed on the NASDAQ stock market under the symbol "YTRA" following completion of the transaction. The combined company will continue to be led by Yatra's management team under the leadership of chief executive and co-founder Dhruv Shringi.

Under the terms of the proposed transaction, it is estimated that the current shareholders of Yatra will continue to own at least 35 percent of the issued and outstanding shares in the combined company. The first $100 million of cash will be allocated entirely to the combined company's balance sheet and to pay transaction expenses.

“Any amount greater than $100 million available from Terrapin 3 Acquisition will then be allocated 80 percent to current Yatra shareholders and 20 percent as cash to the combined company's balance sheet. Cash payments to current Yatra shareholders will be capped at $80 million. In addition, existing shareholders of Yatra may receive additional consideration of up to $35 million upon the achievement of certain financial objectives during the 18 months after closing,” the statement says.

TV18 Group, Norwest Venture Partners, Intel Capital, IDG Ventures India and Vertex Venture Holdings, among others are investors in Yatra. Launched in August 2006, Yatra, through its website, is a one-stop online shop for all travel-related services aimed at both leisure and business travellers in India. A consolidator of travel products, Yatra provides reservation connectivity for more than 60,000 hotels in India. Yatra customers booked more than 2.8 million air travel reservations and hotel stays with total transaction value worth more than $900 million (at current exchange rates) during their fiscal year ended March 2016, an increase of 25 percent from the prior year (at constant currency rates) with 74 percent of transactions coming from repeat clients who return to book more travel.

"This transaction gives us substantial additional resources to support our growth and the continued improvement of our integrated online and mobile platforms. We look forward to expanding our already extensive network of domestic and international partnerships with hotels, airlines, car services, and tour package promoters, as well as further strengthening our brand presence and technology platform,” says Shringi in a statement.

Nathan Leight, chairman of the board of Terrapin 3 Acquisition, says the infrastructure required to compete in India as an online travel agent represents a significant barrier to market entry. “With its high level of brand recognition, large hotel network, significant investment in technology, and deep management experience in this sector, we believe Yatra has created tremendous competitive advantages. Not only is India one of the fastest growing economies in the world, business and leisure travel are among the fastest growing parts of its economy. We believe our combination will provide substantial new resources to position the company for accelerated future growth."

Yatra's investor group will continue to own approximately a third or more of Yatra upon the consummation of the business combination. Promod Haque, senior managing partner at Norwest Venture Partners, an investor in Yatra, says the transaction will provide Yatra with significant resources to further strengthen its presence as one of the leading players in the fast growing Indian online travel market. “We believe that the online travel market in India has a long runway of future growth with the key drivers of increasing prosperity, smartphone penetration and internet access across broad sections of the population. With its strong brand awareness and robust technology platform, Yatra is perfectly positioned to leverage the additional resources from this transaction to grow the business at an even faster pace going forward.”