MakeMyTrip U.S. IPO Is 1st by India Company Since ’06

MakeMyTrip Ltd. is selling the first U.S. initial public offering by an Indian company in four years at a 26 percent premium to the biggest online travel agencies.

MakeMyTrip, which has lost money for three years booking reservations in India and abroad, may raise $70 million today, according to a filing with the Securities and Exchange Commission. The IPO’s midpoint price values the Gurgaon, India-based company at 5.41 times next year’s sales, higher than the average of 4.28 for U.S.-traded stocks from Expedia Inc. to China’s ELong Inc., according to data compiled by Bloomberg and Independent International Investment Research Plc.

Indian companies are already raising record amounts from share sales in their home market even as offerings in America languish below their 2007 levels. While bulls say economic growth in India that’s outpacing the U.S. by almost three times will attract investors to MakeMyTrip, the unprofitable reservations provider may face increasing competition from domestic rivals, according to Renaissance Capital LLC.

“Economic growth, consumer spending and a rising middle class that’s increasing travel demand are key to this story,” said Nick Einhorn, an analyst at Greenwich, Connecticut-based Renaissance Capital, which has studied IPOs since 1991. Still, “the valuation assumes a lot of growth. People who don’t believe in the story as much or think competition is a big risk may think it’s too expensive,” he said.

U.S. Offerings

MakeMyTrip, which is offering 5 million shares at $12 to $14 each, is one of five companies scheduled to price IPOs in the U.S. this week, data compiled by Bloomberg show. DLC Realty Trust Inc., the Tarrytown, New York-based real estate investment trust that manages shopping centers, will seek to raise $520 million today, according to its SEC filing.

China Kanghui Holdings, the Changzhou, China-based maker of orthopedic implants, raised $68.4 million yesterday selling 6.68 million American depositary receipts at $10.25 each after offering them at $9.25 to $11.25, according to a statement and an SEC filing. The stock rose 19 percent to $12.16 today.

MediaMind Technologies Inc., which manages digital advertising campaigns in New York, sold $58 million of shares at $11.50 apiece yesterday after asking for $14 to $16 each. The stock fell 4.4 percent to $11.

The last seven American companies to complete initial sales sold their shares below the forecast price range, and half of this quarter’s U.S. offerings have left buyers with losses, data compiled by Bloomberg show.

S&P 500 Record

While shares of companies that completed IPOs in the U.S. have lost 4.9 percent on average this year as of yesterday, offerings in India gained 20 percent, Bloomberg data show.

Indian companies have raised 660 billion rupees ($14.2 billion) from all share sales this year, putting the market on course to exceed 2007’s record 782 billion rupees, Bloomberg data show. U.S. offerings have raised $76.1 billion this year, on pace to total less than the $139 billion raised in 2007, when the Standard & Poor’s 500 Index rose to a record, the data show.

MakeMyTrip will be the first IPO by an India-based company in the U.S. since WNS Holdings Ltd. raised $255 million in July 2006, Bloomberg data show. Genpact Ltd., a Hamilton, Bermuda-based outsourcing company spun off by General Electric Co. that operates in Indian cities from Bangalore to Gurgaon, sold $568 million of shares in an August 2007 U.S. IPO, the data show.

Great Depression

Only three India-based companies have completed their IPOs in the U.S. since 1999, Bloomberg data show. At least 14 Chinese companies have sold shares in U.S. initial offerings this year.

India’s economy expanded at an annual pace of at least 6.7 percent during the period in which no companies listed in New York, while the U.S. suffered the longest recession since the Great Depression, data compiled by Bloomberg show. India will expand 9.4 percent this year as America’s gross domestic product increases 3.3 percent, according to estimates by the Washington-based International Monetary Fund.

India is “pretty underrepresented in terms of public listings here,” said Uri Landesman, president of New York-based hedge fund Platinum Partners LLP, which oversees $525 million. “Investors would rather have U.S.-listed stuff to play with. India is a pretty solid story right now. If this goes well we’re going to see more.”

MakeMyTrip reported net income of $1.3 million last quarter, reversing a loss from a year earlier, after increasing sales by 49 percent, its SEC filing showed. In the prior three fiscal years, it lost a combined $32.5 million.

Relative Value

About 48 percent of the $1 billion in online travel reservations made in India last year were booked through the company, while and accounted for a combined 42 percent of sales. MakeMyTrip also cited Expedia and Inc. as competitors.

The $13 midpoint IPO price values MakeMyTrip at 5.41 times next year’s revenue, estimates from London-based Independent International Investment Research show. That’s based on sales of $120.3 million in 2011, the data show.

Five online travel companies traded on U.S. exchanges are valued at an average of 4.28 times analysts’ estimates for revenue, data compiled by Bloomberg show. The largest by market capitalization, Inc. of Norwalk, Connecticut, trades at 3.97 times, while Bellevue, Washington-based Expedia is valued at 1.93 times, according to the data.


ELong of Beijing, part-owned by Expedia, trades at 3.94 times. The company gets all its sales from China, which has almost five times the number of Internet users in India, the Internet World Stats website showed. Shanghai-based International Ltd., China’s biggest online ticketing agent, is the only company with a higher multiple than MakeMyTrip.

For MakeMyTrip’s IPO, “I wouldn’t expect the highest valuation, as the competitive environment may be quite tough,” said Josef Schuster, the Chicago-based founder of IPOX Capital Management LLC, which oversees $3 billion. Still, “it’s an Indian ADR, which is something different and unique, which I think will attract potential investors,” he said.

Schuster said he plans to buy shares for his Direxion Long/Short Global IPO Fund.

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