MakeMyTrip Announces $200 Million Raise Through Convertible Notes

  • In May 2017, MakeMyTrip had raised $330 million in funding from Prosus & Naspers and Trip.com.
  • With this fundraise, The company has raised over $740 million in funding.

Nasdaq listed online ticket booking company MakeMyTrip announces a $200 million raise (or about Rs 1,450 crore) in debt through the issuance of senior convertible notes.

The announcement comes after the company is trying hard to recover its business growth that was hit hard by the COVID-19 pandemic. According to the company, The sale of securities to the initial buyers is expected to settle on February 9, 2020.

The senior convertible notes offering was upsized by $25 million from the previously announced $175 million offerings. The notes will not bear regular interest and the principal amount of the notes will not accrete, the company said.

Further, The convertible notes will mature on February 15, 2028, unless earlier redeemed, repurchased, or converted in accordance with their terms before such date. The notes will be convertible into the company’s ordinary shares after preceding the post maturity date. Meanwhile, the company may repurchase all notes in 2024 and 2026, as well as in the event of certain fundamental changes.

Speaking on the development, Mohit Kabra, Chief Financial Officer, MakeMyTrip Group, said, “This raise will bolster our cash reserves, allowing us to meet the working capital requirements as the business recovery gathers momentum and also pursue any investment opportunities in the growing Indian market”.

The offering with a zero-coupon rate and conversion premium of 37.5% will encourage global investors’ to invest behind strong Indian companies and businesses, he added.

Following the company’s official statement, The net proceeds will be used for MakeMyTrip’s working capital and other general purposes.

Gurugram-based entity reported an increase in revenue by 5.3% from $486 million in FY-19 to $511.5 million in FY-20. However, In the quarter ended December 2020, it saw a decline in revenue by 61% to $56.8 million if compared with the previous year’s quarter’s revenue of $146.9 million ended December 2019.

As of December 31, 2020, the balance of cash and cash equivalents and term deposits on the company’s balance sheet was $227.6 million.

The company is funded by marquee investors including SAIF Partners, Helion Venture Partners, Tiger Fund, Sierra Ventures, Trip.com, Prosus & Naspers, among others.

What is Convertible Note?

A Convertible Note is a form of short-term debt that converts into equity. In short, The investor lends money in a form of debt, and instead of getting a return in the form of principal plus interest, the investor would receive equity in the company.

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