Weeks after failed merger with Ebix, Yatra raises $11.5 mn from public offering of shares

Weeks after failed merger with Ebix, Yatra raises $11.5 mn from public offering of shares
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26 Jun, 2020

NASDAQ listed travel portal Yatra Online has raised $11.5 million through the public market route. 

The Gurugram-based company sold 14.37 million ordinary shares at $0.80 per share, including 1.87 million shares that were part of the underwriter’s option.

The firm said that it has raised the sum after HC Wainwright, the sole book-running manager for the offering, exercised its option in full to purchase the overallotment shares. The underwriting discounts, commissions and offering expenses payable by Yatra would be deducted from the total.

The online travel agency will use the fresh capital for general corporate and business purposes, the company statement said.

The company announced its decision to take the public market route to raise funds a week ago.  The fund infusion is expected to help Yatra restore much-needed liquidity to tide over the slowdown caused by Covid-19 induced travel restrictions.

As of June 4, the company had available liquidity of $32.5 million, CEO and co-founder Dhruv Shringi said at an investor presentation recently. 

“The firm has more than halved its fixed costs from $2.7 million in March to $1.2 million in May this year. Our fixed costs (have) reduced to 43% of March 2020 levels and 30% of March 2019 levels,” he said at the time.

In the past few months, the online travel agency has cut management salaries by 50% and announced variable reductions between 25% and 75% across the board.

Earlier this month, Yatra terminated a merger agreement with Ebix over alleged violation of agreement terms. It also initiated legal proceedings against Ebix in the Delaware Court of Chancery, seeking substantial damages.

If the deal had gone through, the online travel agency would have had an enterprise valuation of $338 million, according to the merger agreement drafted on July 16, 2019. 

“Ebix’s conduct breached material terms of the agreements and frustrated Yatra’s ability to close the transaction and obtain the benefit of Yatra's bargain for Yatra's stockholders,” it said at the time.

Ebix, in turn, threatened to file a countersuit against Yatra.

“Ebix intends to enforce all of its rights under the merger agreement, and is currently considering all options, including a countersuit against Yatra, on account of multiple breaches of the merger agreement,” the Atlanta, Georgia-based company said.

TechCircle was the first to report that Yatra was looking at adjacent sectors to find new sources of revenue. According to two people privy to developments at the company, Yatra was gearing up to foray into online commerce of office supplies to leverage its strong corporate client base.

The company was founded in 2006 by former Ebookers Group executives Shringi, Manish Amin and Sabina Chopra. It has raised capital from venture capital, private equity and strategic investors such as Mukesh Ambani-led Reliance Industries, Norwest Venture Partners, Intel Capital, IDG Ventures and Vertex Venture Management.

In July 2016, Yatra signed a reverse merger agreement with US-based special purpose acquisition company Terrapin 3 Acquisition, which was listed on NASDAQ, paving the way for a backdoor listing of the second Indian online travel services provider in the US after rival MakeMyTrip.