China's Ctrip to become MakeMyTrip’s largest shareholder as Naspers exits

Chinese travel services company Ctrip.com International will become the largest shareholder in MakeMyTrip by buying South African technology conglomerate Naspers’ entire stake in the Nasdaq-listed travel portal. 

In a statement, MakeMyTrip said the two strategic investors had entered into a share exchange agreement.

“Naspers will exchange its entire shareholding in MakeMyTrip for newly-issued shares of Ctrip and Ctrip will acquire Naspers’ current shareholding in MakeMyTrip,” the company said.

Ctrip, which had earlier invested $200 million in MakeMyTrip. will subsequently invest certain ordinary shares and class B shares of MakeMyTrip in a third-party investment entity.  

The third-party investment entity will own ordinary shares and class B shares of MakeMyTrip representing approximately 49% and 4% of MakeMyTrip’s total voting rights respectively, the statement added.

In a management call after the announcement, it was declared that Ctrip will now have five seats on MakeMyTrip’s board.

Naspers, which invested $330 million in MakeMyTrip in 2016, will now own 5.6% of Ctrip’s outstanding shares. 

The move comes at a time when Naspers is looking to float its e-commerce ventures on the Euronext stock exchange in Amsterdam.

Naspers has been one of the most prolific technology investors in India.

The South African conglomerate led an investment of $540 million in ed-tech startup Byju's in December last year. In the same month, it led a $1 billion investment in food-tech unicorn Swiggy to mark one of the single-largest infusions into an Indian startup.

In May last year, Naspers harvested more than $2 billion by exiting its six-year-old bet on Flipkart after the e-commerce giant was acquired by Walmart.

“The agreement we have announced today is a significant step in the growth ambitions of both MakeMyTrip and Ctrip and we believe continuing to support them as a shareholder will create additional value for Naspers and our shareholders,” said Naspers chief executive officer Bob van Dijk.

Naspers became the largest shareholder in MakeMyTrip after the company merged with the ibibo Group in 2016. That deal had marked the biggest consolidation in the online travel agency (OTA) segment in India.

MakeMyTrip chairman and group chief executive officer Deep Kalra said that the company will leverage the latest investment to benefit from the growth potential between India and China.

“This partnership will benefit all our stakeholders including employees, customers and business partners,” said Rajesh Magow, co-founder and chief executive officer of MakeMyTrip. “We look forward to working with the Ctrip team to continue to take our business to the next level.”

The transaction will be completed by the second half of this year, subject to regulatory approvals.

Separately, MakeMyTrip’s Nasdaq-listed peer Yatra earlier this year received an offer from software firm Ebix to buy out the portal for $336 million. The deal is currently at the due diligence stage.