RateGain Travel Technologies Ltd, a company of travel and hospitality technology services, has submitted its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for its proposed initial public offering (IPO), joining a long list of companies looking to go public amid compelling primary market behavior.
The proposed IPO draft papers of the Noida-based travel and hospitality software-as-a-service (SaaS) startup consists of a fresh issue of equity shares worth up to Rs 400 crore and an offer for sale of up to 2,26,05,530 equity shares. Wagner Limited will offload 1.71 crore equity shares in the OFS, while Bhanu Chopra would sell up to 40.44 lakh shares alongside Megha Chopra who aims to release up to 12.94 lakh shares, and Usha Chopra will sell up to 1.52 lakh shares of RateGain. The company plans to raise Rs 1,200 crore through the IPO, according to unofficial sources.
The company seeks to incorporate the funds to repay the loan from Silicon Valley Bank procured by RateGain UK, its subsidiary, and also pay deferred consideration for the buyout of DHISCO an information technology company specializing in electronic hotel transaction solutions alongside making strategic investments, acquisitions, as well as inorganic growth to invest in research, innovation, and artificial intelligence and consider purchasing specific capital accessories for its data center & general corporate purposes.
The company has appointed Kotak Investment Banking, IIFL Securities, Nomura, and KFin Technologies (Karvy) as book-running lead managers for the IPO. Qualified institutional investors will end up receiving up to 75% of the offering, while non-institutional investors will receive 15% of the offering, and retail investors shall receive the remaining 10%.
RateGain, founded in 2004 by Bhanu Chopra, is a SaaS company that helps travel and hospitality businesses to streamline operations and sales. The startup assists hotels and booking agents in maximizing profitability by allowing them to calculate the optimum pricing for their products based on demand, current market rates, among other factors. The company prioritizes its pricing decisions based on the prices imposed by competitors or other nearby hotels. It also notifies hotels about what others are saying about their facility or proposition on the internet.
In addition, RateGain offers hospitality companies to connect more customers by improving distribution points and providing marketing insights from multiple social media channels to increase conversions. It analytically examines market rate, travel aggregator rankings and reviews, and price strategies. RateGain’s distribution partners provide the hotel products to online ticketing platforms again after the pricing is determined.
Due to the consequence of Covid-19 on the travel industry, RateGain’s revenues dropped to Rs 250.7 crore in FY21. The previous year, it generated Rs 398.7 crore in overall revenue. In FY21, it also suffered a loss of Rs27.8 crore, more than double from Rs 12.8 crore the previous fiscal year. In FY19, the company had a profit of Rs 11.5 crore on revenue of Rs 261.5 crore.