MakeMyTrip share swap is just the ticket for Naspers


MakeMyTrip share swap is just the ticket for Naspers

Exchange for a stake in China's Ctrip will boost growth ambitions of both entities, the company says

Nick Hedley and Mudiwa Gavaza

Naspers has swapped its interest in India-based online travel platform MakeMyTrip for a 5.6% stake in China’s International.
The share exchange transaction allows Ctrip to enjoy a larger exposure to the India travel market and benefit from the growth of MakeMyTrip, Naspers said.
The Nasdaq-listed Ctrip, already a large shareholder of MakeMyTrip, has a market capitalisation of $23.5bn (R339bn), meaning Naspers’s stake will be worth about $1.3bn at current valuations.
The deal will also allow Nasdaq-listed MakeMyTrip “to benefit from Ctrip’s significant global scale”.
The share exchange transaction is a significant step in the growth ambitions of both MakeMyTrip and Ctrip, Naspers said.
The deal, expected to close in the second half of 2019, would “create additional value for Naspers and its shareholders”.
Shares in MakeMyTrip saw positive reaction, going up 7% on New York’s Nasdaq in trading on Friday.
‘Additional value’
Paul Theron, fund manager at Vestact Asset Management, said that as Ctrip acquires a greater stake in MakeMyTrip, it is likely that the market is expecting a buyout in future that traders and investors would want to capitalise on. 
Naspers said in its 2018 annual report that following its merger with Goibibo the previous year, MakeMyTrip “strengthened its leadership in the large, fast-growing Indian online travel agency market”.
In May 2017, Naspers contributed $132m towards a $330m fundraising round by MakeMyTrip, which was also backed by Ctrip. It invested another $23m during the year to maintain its relative shareholding. Following those investments, Naspers owned 43% of MakeMyTrip.
Similar to SA-based Computicket, MakeMyTrip’s services and products include air ticketing, hotel and alternative accommodations bookings, holiday planning and packaging, rail ticketing, intercity bus ticketing, car hire, and ancillary travel requirements such as facilitating access to third-party travel insurance and visa processing.
“MakeMyTrip has transformed travel in India and beyond since 2000. 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 Bob van Dijk.
Naspers’s share price has risen 48% in the past six months, bucking the trend seen on the JSE in recent times. Apart from the appreciation in its Tencent investment, Theron said this is due to the market acknowledging the company’s attempts to constantly create value for shareholders. “Management is not just sitting on their hands,” he said.

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