TBO Tek's IPO Is Coming: What We Know About Its Business

06.05.2024 - 15:33 / skift.com / Peden Doma Bhutia / Gaurav Bhatnagar

India’s TBO Tek will start lining up buyers for its IPO this week and shares should start trading on May 15. In all, it hopes to raise INR 15.5 billion ($180 million).

The IPO also comprises a fresh issue of INR 4 billion ($48 million) and an offer for sale of up to 15.6 million shares by its promoters Gaurav Bhatnagar, Manish Dhingra, LAP Travel, and investors TBO Korea and Augusta TBO. Post-issue, promoter stake is expected to reduce from 51% to 44%.

As a private company, TBO had in the past only revealed so much about its business. But the IPO prospectus tell us a lot. Here’s what we learned reading it:

TBO Tek (formerly known as Tek Travels) was established in 2006 with the aim of simplifying airline ticket bookings for travel agents. Now it’s a global B2B travel platform: It does not sell directly to travelers – it’s a hub where travel agents can book flights, hotels, car rentals, transfers, cruises, insurance, cargo, marine, rail, and sightseeing.

TBO’s prospectus says there are over 750 airlines accessible through its platform and over a million hotels worldwide.

It’s global: TBO Tek has serviced over 159,000 buyers across 100 countries, and the platform makes it easy for agents to pay in their own currency while suppliers get paid in theirs. The TBO platform supported payments in over 55 currencies.

TBO’s revenue comes from two main sources:

The prospectus mentions that the commission earned is higher for hotels and ancillary offerings and stood at 8.1% for the nine months ending December 2023, compared to around 2.6% for air tickets. 

For the first three quarters of fiscal 2024 (April 2023 to December 2023), here are the numbers:
Revenue: INR 10.2 billion ($122 million)
Growth: 31%

EBITDA: INR 1.9 billion ($22 million)
Growth: 32%

Net Income: INR 1.6 billion ($19.2 million)
Growth: 24%

Cash Position: INR 4 billion ($48 million)

Gaurav Bhatnagar and Ankush Nijhawan are the co-founders and joint managing directors of TBO Tek. In 2018, Affirma Capital had invested around $42 million to acquire a 46% stake in the company.

Global investor firm General Atlantic had acquired a minority stake in TBO from Affirma Capital last October. Affirma divested around 7% of its stake in the company through the deal with General Atlantic.

The current IPO price band has been set at INR 875-920 ($10.50 – $11). Prior to the commencement of the issue, market observers report that TBO Tek’s shares are trading at a premium of INR 520 ($6.2) in the grey market. This suggests that the anticipated listing price for TBO Tek shares may reach a 56.5% premium.

Middle East: TBO entered the Middle East market in 2011, focusing on four key countries: United Arab Emirates, Saudi Arabia, Kuwait and Qatar.

TBO also works with Saudi