- redBus follows suit as Ibibo acquires it in a supposedly 135 million dollar deal
The world of news seems to be occupied with reports of deals, mergers and acquisitions of late. After the much hyped deal between Yahoo and Tumblr, the world of news is buzzing with another huge deal story. This time an Indian company has been acquired and it looks like it is one of the most promising international deals for an Indian company.
Legacy of redBus
redBus was created seven year ago under the smart leadership of Phanindra Sama and Charan Padmaraju who were both engineers from prestigious BITS Pilani. This portal is India’s largest bus ticketing portal as it sells tickets worth more than 600 crores annually and covers whopping 10,000 bus routes. Hence, one can be sure of the massive popularity and market that redBus enjoys. The revenue that the company generated back in 2012 is 350 crores.
Why redBus chose Ibibo?
Ibibo group is a subsidiary of Naspers which is a south African company that is known for sealing deals and growing it to make it potentially big. When Sama was approached to shed light on why he intended to sell off such a successful venture to another company, he was quick to state that, “They (Ibibo) have acquired many internet companies and have allowed them to function independently. I met several of the other founders who have stayed on and are happy. Personally, I don’t intend to change my lifestyle so I didn’t need more money.” He further said that, “Naspers is known to pick up market leaders in emerging markets. They invested in Chinese Internet firm Tencent Inc. in 2001 and it has grown into a multi-billion dollar firm today.”
It is interesting to mention that redBus was doing fairly good and a business magazine named Fast company placed redBus among 50 most innovative companies of the world where it shared space with giants like Apple and even Facebook.
However, there are a lot of other reasons that forced founder of redBus to call a deal. Although, the gross value of bus ticket transactions spans to more than 600 crores, the net income is much lower because the company works on commission revenues upon successful transactions. So, when the founders expressed interests in being sold out, Ibibo was quick to come to the screen and be a part of yet another big overseas acquisition of an Indian company.
The actual amount of the deal has not been disclosed but as per inside reports, it is being hinted that the deal stands at 135 million dollar which transfers to roughly 800 crores in the Indian value. No doubt, redBus seems to have gained the right value as per its share and the fact that Ibibo will continue to run redBus as a separate entity means that it is a win win situation for everyone. Sama, CEO of Pilani Soft Labs was quoted as saying, “On the basis of the amount that went into the company and the returns offered now, redBus is giving the highest returns ever offered through an M&A (merger and acquisition) transaction in the consumer Internet space,”
Ibibo has been making good grounds in the Indian market and it already owns a couple of company in the travelling sector as Goibibo.com and TravelBoutiqueOnline are both ventures of Ibibo. However, none of them enjoy the same popularity as redBus and so it is likely that this new venture of Ibibo can take them to new heights and is another step en route to success.
No doubt, it is one of the largest deals for an Indian internet company and is another proof of the fact that Indian companies are all set to have a bigger and larger reach in the world market.