RateGain Travel Technologies IPO: Opens tomorrow; find key details that investors must know before investing

The Noida-based distribution technology and Software-as-a-Service (SaaS) company RateGain Travel Technologies Limited will launch its initial public offering (IPO) for subscription on Tuesday, December 7, 2021. The three-day issue will conclude on Thursday, December 9, 2021.

The SaaS company has fixed a price band of Rs 405-425 per equity share. At the upper end of the price band, the initial share sale is expected to fetch Rs 1,335.73 crore.

The retail investors can place a bid for a lot of 35 Equity Shares and in multiples thereof. Retail investors can invest a minimum of Rs 14,875 for one lot, and their maximum investment would be Rs 1,93,375 for 13 lots. The offer includes a reservation of shares worth Rs 5 crore for the company's employees who will receive those shares and RateGain Travel Technologies is offering a discount of Rs 40 per share to the final issue price for the Employee Reservation Category.

Up to 75 per cent of the issue is reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors, and the remaining 10 per cent for retail investors.

The IPO comprises a fresh issue of equity shares aggregating up to Rs 375 crore and an offer-for-sale (OFS) of up to 2.26 crore equity shares by promoters and existing shareholders. The OFS comprises the sale of 1.71 crore equity shares by Wagner Limited, up to 40.44 lakh equity shares by Bhanu Chopra and up to 12.94 lakh equity shares by Megha Chopra and up to 1.52 lakh equity shares by Usha Chopra. The company will not receive any proceeds from the Offer for Sale.

Issue Timeline

Bidding Period for the IPO: December 7-9, 2021.

Allotment: December 14, 2021.

Initiation of Refunds: December 15, 2021.

Credit of Shares to Demat Account: December 16, 2021.

IPO Listing: December 17, 2021.

The current shareholding of promoters stands at 65.4 per cent which will come down to 55.0 per cent after the issue.

Proceeds from the fresh issue will be used for repayment/prepayment of debt availed by RateGain UK, one of the subsidiaries, from Silicon Valley Bank; payment of deferred consideration for the acquisition of DHISCO and strategic investments, acquisitions and inorganic growth. The proceeds will also be used in investment in technology innovation, artificial intelligence and other organic growth initiatives; purchase of certain capital equipment for our Data Center; and general corporate purposes.

Repayment of debt: Rs 85.26 crore.

Payment for deferred consideration for the acquisition of DHISCO: Rs 25.20 crore.

Strategic investment, acquisitions and inorganic growth: Rs 80 crore.

Investment in technology: Rs 50 crore.

Purchase of capital equipment for date center: Rs 40.77 crore.

Kotak Mahindra Capital Company Limited, IIFL Securities Limited and Nomura Financial Advisory and Securities (India) Private Limited have been appointed as lead managers for the issue while KFin Technologies Private Limited is the registrar for the purpose.

RateGain Travel Technologies is among the leading distribution technology companies globally and are the largest Software as a Service ("SaaS") company in the hospitality and travel industry in India. It began operations in 2004 with the introduction of a competitive intelligence price comparison product for hotels and have over the last 15 years, expanded our product portfolio to include artificial intelligence and machine learning capabilities that leverage our in-house data lake to offer products in the areas of rate intelligence, cognitive revenue management, smart distribution and brand engagement.

It offers travel and hospitality solutions across a wide spectrum of verticals including hotels, airlines, online travel agents ("OTAs"), meta-search companies, vacation rentals, package providers, car rentals, rail, travel management companies, cruises and ferries. It is one of the largest aggregators of data points in the world for the hospitality and travel industry. (Source: Phocuswright Report)

As of September 30, 2021, it had 1,462 customers including eight Global Fortune 500 companies.

Its subsidiary RateGain US is primarily engaged in the business of providing data as a service, distribution and market technologies to the travel and hospitality sector on a SaaS platform. On a standalone basis, the sale of our Distribution products contributes to the total income of RateGain US.

As of the date of the Red Herring Prospectus, RateGain UK holds 100 per cent of the total equity shares of RateGain US. Further, as of October 31, 2021, RateGain US does not have any outstanding or sanctioned indebtedness, except the two unsecured promissory notes amounting to USD 3,369,476.33 (including interest) equivalent to Rs 252,003,134.75 (assuming an exchange rate of Rs 74.79 per 1 USD as of October 29, 2021)issued by RateGain US in the name of Medley Capital Corporation, which have been considered as borrowings under the standalone financial statements of RateGain US and thereafter in the consolidated financial statements of RateGain UK.