China’s internet giant Tencent and South Africa’s media powerhouse Naspers are doubling down on tech in India. TechCrunch has just found out that Ibibo, their domestic joint venture, has acquired redBus.in, a Bangalore-based online bus ticketing company that has become a dominant and disruptive force in how people travel in the country. A formal announcement (which we are embedding below) will be coming out shortly.
Ibibo’s CEO and founder, Ashish Kashyap, tells us that the terms of the deal are not being disclosed, but there have been rumors of an acquisition in the works for some time, with prices in the region of around $135 million. The acquisition is interesting not only because it signals more activity for Ibibo, which is 80 percent owned by Naspers and 20 percent by Tencent, but also raises questions of whether the two plan to take Redbus’s platform and business model to new markets, like China for example.
Kashyap confirmed to TechCrunch that the company will keep Redbus running independently and operating as a separate business. It plans to bring Redbus into its existing travel portfolio which includes a B2C travel aggregator, Goibibo.com, and TravelBoutiqueOnline, a B2B travel agency platform.
He also reiterated that Phanindra Sama, the co-founder and CEO of Redbus, will be staying on and running the business under the new owner. “Yes. Absolutely. He is going to continue to participate with me and continue his role as the CEO of Redbus.â€
Rumors have been swirling for the past week on Redbus’ acquisition, since a NextBigWhat report quoted a source saying a buy-out was on the cards for an estimated $135 million (800 crores).
Again, we don’t have details on the final sale price, but there are a number of signs of the company growing fast. Since the company’s founding in 2006, Redbus has shot past the 2 million user mark, and last year hit 10 million in ticket sales, using a combination of online reservations with confirmations delivered via SMS, usable across handsets in this feature-phone-dominated market.
It employs more than 600 staff, and sells more than a million tickets each month, across daily listings of 228,000 seats. It takes a commission from bus operators upon successful transactions.
If the $135m figure is accurate, it looks like a healthy exit for the copany. Bangalore-based Pilani Soft Labs, the formal name of the holding company that owns Redbus, raised a Series A round from Seedfund of $1 million. A Series B from Seedfund and Inventus Capital Partners in 2009 was for $2.5 million, and in 2011, Helion Venture Partners led a Series C to raise $6.5 million. Invenus and Seedfund came in for that latest round, as well.
As Drew pointed out when he visited Redbus in February, the company has been one to watch. Its chief product officer, Alok Goel, is an ex-Googler who approaches the business of organizing how people find and pay for bus tickets to a new level of big data. You can see how this model could be subsequently applied to the same situation further afield, or to different problems altogether.
If that is a problem that ambitious Redbusâ€"and now its ambitious owners Tencent and Naspersâ€"want to tackle, it could be some time before that happens. “The Indian online bus market itself is under penetrated at less than 6 percent,†Kashyap told TechCrunch. That means more room to grow at home first.
There is also the case with platforms. For now the majority of Redbus busines is online; the company only really started to make a push on mobile in February. With India as one of the world’s fastest-growing smartphone markets at the moment, this could present a new spurt of growth and opportunity for the company. IDC estimated that only 2.5 percent of mobile phones in the country were smartphones in 2012.
Tencent has also been keen to get in the Indian market. In July last year, it launched its mobile messaging app, WeChat, in India through Ibibo. When I visited its offices in Shenzhen earlier this year, the company spoke about how it conquered the domestic social networking scene, and its plans on expanding to more Asian countries. It’s started releasing TV ad campaigns in some of the countries in the region, and we can expect the company to continue to push its products in India.
Ibibo is owned by Naspers’ online media arm, MIH. Last year, MIH led a Series D round of $150 million in funding in Bangalore-based e-commerce company, Flipkart. MIH also won a board seat on Flipkart as a result of the funding. Flipkart sells a wide variety of consumer products such as books and apparel. The acquisition of Redbus could have it start cross-selling bus tickets on the site to the growing numbers of Internet-connected Indians.
Naspers has also declared it will up the ante on e-commerce, as online businesses grow for it in its home country of South Africa and abroad. Naspers chairman, Ton Vosloo, said during the company’s November 2012 earnings call that it is starting to place increasing focus on selling online. Last year, it acquired a majority stake in eMag, one of the biggest e-commerce sites in Romania. It also has a minority stake in Souq.com, an e-commerce portal in the Middle East, and bought 70 percent of Turkish shopping site, markafoni, in 2011.
Naspers, through its Indian subsidiary, ibiboGroup acquires redBus.in
ibiboGroup (MIH India), has executed a binding agreement to acquire India’s leading online Bus ticketing business, redBus.in(Pilani Soft Labs Pvt. Ltd) for an undisclosed amount.
This transaction will expand and diversify ibiboGroup’s existing travel assets : Goibibo.com (one of the leading B2C Online travel aggregators) and TravelBoutiqueOnline (a B2B Online travel platform that enables thousands of small and medium agents)
The combined volumes of redBus.in and ibiboGroup’s existing travel assets makes the group, one of the biggest online travel players in India.
All the travel entities of ibiboGroup (MIH India), including redBus.in, will continue to run independently and operate as separate businesses to drive deep focus. The founders and management teams of each of these entities will continue to build out their businesses.
redBus.in, founded by Phanindra Sama in 2006 is India’s number one online bus ticketing platform by all metrics : sales, transaction volumes and available inventory. redBus aggregates bus inventory from thousands of bus operators and makes it available real time to end consumers and agents across the country via its e-commerce portal www.redBus.in.
redBus aggregates 228,000 seats per day, sells more than a million tickets a month and has 600+ full time employees. The core business model of redBus is commission revenues on successful transactions.
Speaking on this event, Phanindra Sama, Co-Founder & CEO of redBus.in said “We are excited to be a part of ibiboGroup. Naspers’ strong belief in internet industry and operating experience in multiple countries will help redBus grow into a renowned brand in the coming years.â€
According to Ashish Kashyap, CEO of ibiboGroup : “Our key motivations to acquire redBus are :  Strong management and founding team that will continue to run redBus as an independent operation. Second, significant leadership and market share of redBus in the online bus ticketing space.  Third, this marriage leap frogs us to become an even stronger online travel player in India.  This gives us significant combined scale in terms of daily transaction volumes and GMV. Lastly, we see this as an exciting market opportunity. Online penetration of the bus market is only 5.7% compared to 28% for air travel, suggesting headroom for rapid future growthâ€
RedBus.in provides an online service to purchase bus tickets in India. Like all innovations, redBus too has a very interesting story. All the founders used to work in Bangalore at the time (sometime in 2005) - all with top IT MNCs - IBM, Texas Instruments and Honeywell. They were friends from BITS Pilani, one of India’s finest engineering colleges. During Diwali that year, one of them wanted to spend the festival in his home town. Since he didn’t know...
ibibo Web Pvt. Ltd., an Internet and mobile product company, provides social gaming based social networking and e-commerce platforms. It enables users to get connected and network through various forms of social gaming and contesting genres. The company was founded in 2006 and is based in Bengaluru, India. ibibo Web Pvt. Ltd. operates as a subsidiary of Mih India Global Internet Limited.
Per the company’s claims as of March 2008, Tencent is China’s largest and most utilized internet services portal. The company powers popular products like instant messaging and gaming service QQ and e-commerce and online trading platform PaiPai, amongst others.
Naspers is a leading multinational media group, incorporated in 1915 as a public limited liability company and listed on the Johannesburg Stock Exchange (JSE) in September 1994. The company also has an ADR listing on the London Stock Exchange (LSE). Over the past two decades the group has evolved from a traditional print media business in one country, to a broad-based e-media company in multiple markets. The group’s principal operations are in internet platforms (focussing on commerce, communities, content, communication and...
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