Skift Take
RateGain, a 15-year-old travel tech company, wishes to position itself for development post-pandemic by raising capital. Its personal equity sponsor TA Associates likewise wants a payday, and no surprise.
Sean O’Neill, Skift
Travel tech company RateGain, backed by private equity company TA Associates, told regulators in India on Tuesday that it prepared to go public by noting on India’s stock market.
TA Associates has a 22.8 percent stake in the tech supplier by means of its affiliate Wagner. According to the filings, the firm will offer a majority of its shares, 17 million, in the initial public offering. The business’s creators are offering a few of their shares, too.
The initial public offering will also involve issuing shares, which the business hopes will raise an extra $54 million (400 crore rupees). The timing depends upon regulative approval.
RateGain, established 15 years earlier and based in Noida, India, uses organization intelligence, distribution, and social media management services. Its 1,400 customers consist of hotels, airlines, trains, vehicle rental companies, and cruise lines. It is one of the world’s biggest supervisors of travel data. If, as a tourist, you have actually reserved a hotel room online through price comparison, or metasearch, or through a business booking tool, you have actually probably utilized RateGain’s innovation without understanding it.
The pandemic hurt the business, as it did most companies in the travel sector. RateGain’s earnings dropped to approximately $34 million (250.7 crore rupees) in the fiscal year ending March 31, compared to income of about $53 million (398.7 crore rupees) in the previous fiscal year. It reported a loss of approximately $300,000 (27.8 crore rupees) in the fiscal year through March, increasing its previous year’s loss.
RateGain CEO Harmeet Singh. Source: RateGain The relocate to go public had been a treasured objective of the business’s sponsors prior to the pandemic occurred. In October 2019, Harmeet Singh ended up being RateGain’s CEO, as the creator of the company, Bhanu Chopra, transferred to the chairman role. Singh has actually led more than 100 mergers and acquisitions at other innovation business. The firm’s sponsors saw Singh as somebody who might help set up the company to list publicly. The business said it prepared to utilize the profits from the going public to pay down loans from Silicon Valley Bank and others. It will also utilize the capital to make strategic financial investments, acquisitions, and technology financial investments.
Prior to the pandemic, about half of RateGain’s earnings came from its channel management, or circulation, platform, mainly for hotels.
On the price comparison side, it has faced difficulties by startups such as OTA Insight, which participated in something of a cost war on commissions with RateGain and other gamers prior to the pandemic.
Singh’s and Chopra’s wider post-crisis vision is to club prices, distribution, social management, and other services together and make RateGain a one-stop shop for travel business. They will likely first target hotel companies, much of which look for to streamline the number of software vendors they need to deal with in light of staffing shortages. Numerous hotels also wish to avoid ending up being more based on online travel bureau for distribution, and RateGain offers tools to encourage more direct reservations and examine need patterns.
RateGain’s executives think that hotel companies and other travel suppliers will do more outsourcing to suppliers such as themselves as the crisis wanes. They anticipate its services in revenue management, business intelligence, and data lakes will be appealing.
That stated, everyone in hotel tech says their cloud-based service is “next-gen” and uses “artificial intelligence.” RateGain has actually claimed its product Optima MarketDrone stands apart by tracking the intra-day rate modifications at a hotel’s competitors and that the item is the only real-time hotel rate intelligence platform out there– pushing alerts to whichever gadget hotel income managers prefer. Nevertheless other business make competing claims for their services.
M&A for RateGain Is Likely Post-IPO
The company will need to continue constructing an ecosystem where disparate applications can collaborate efficiently to develop a competitive benefit.
To fill spaces in its offering, it seems likely RateGain will do another acquisition post-IPO of a vendor in a worth series of less than $75 million. Mergers and acquisitions would follow the company’s previous pattern. On the channel management front, the business got DHISCO [which represents the Distribution Hospitality Intelligent Systems Co.] in 2018. In an interview carried out before the IPO filings, CEO Harmeet Singh said:
“For M&A, I likewise consider company culture. If a possible target is VC- [venture-capital] -backed and has little experience in making profits, its company culture might be too various from ours. For M&A, I likewise look for some extension and included penetration into brand-new geographical markets.”
“As the marketplace settles, we’ll think about tuck-in acquisitions,” Singh stated. “By that, I imply, the product [of the target company] might be pretty comparable to what we offer, and an offer would mainly refer combining the client bases.”