By buying Naspers’ stake, Ctrip now owns 49% of MakeMyTrip

The world’s second largest online travel company Ctrip gave an indication of strengthening its presence in India after it announced a deal to buy the entire stake of the South African Internet giant Naspers in Indian travel company MakeMyTrip.

Ctrip will increase its stake in MakeMyTrip to 49% through an exchange deal that sees Naspers swap its shares for 5.6% of Ctrip.

The investment also gives Ctrip 4% of MakeMyTrip’s voting power, mentioned a joint press statement.

MakeMyTrip has a current market cap of $2.69 billion while Ctrip’s current share price gives it an overall valuation of $23.5 billion. In the industry, only booking holding is valued higher with a current market cap of $84 billion.

The three companies have travelled together for some time now. Ctrip and Naspers invested $330 million into MakeMyTrip and merged Ibibo's travel business with MMT's India business nearly two and a half years ago. Prior to that, Ctrip invested $180 million into the Indian company in January 2016.

While this is share-swap without any monetary transaction involved in the deal, this is sort of the second exit for the South African group. Scoring an IRR of approximately 32%, it sold out 11.2% stake for about $2.2 billion.

Speaking to Entrackr last year, Victor Tseng, senior vice president, Ctrip, had said, “We have invested in MMT to grow and capitalise maximum from the Indian travel segment. It’s the largest online travel company in India and we will continue to support for its future growth”.

As far as investment is concerned, Ctrip had made it clear that it has an eye for only technology and content companies that touch any point of the travel value chain.

It is significant that the deal has come ahead of Naspers' planned listing of its international investments on Euronext Amsterdam by the second half of 2019. Till now, Naspers has put in nearly $3 billion in India, and also owns fintech company PayU and classifieds platform Olx.