Anil Ambani led Reliance Capital makes huge gains from Yatra stake sale

Anil Ambani-led Reliance Group’s flagship Reliance Capital has made multifold gains by selling its three million equity shares in US-listed Yatra Online, India’s second-largest online travel operator. The transaction is part of Reliance Capital’s plans to focus on core business and monetise non-core and non-financial investments.

The company is believed to have sold the shares for over three times the cost of investment.

Gurugram-headquartered Yatra in 2016 had reverse merged with Terrapin 3 Acquisition Corp and listed its shares under the ticker symbol ‘YTRA’ on Nasdaq, which also houses online travel portal giant MakeMyTrip. Pursuant to the merger event with Terrapin, Yatra had allotted 3.02 million equity shares to Reliance Capital. This was, at that time about, 12.7% equity stake in Yatra.

The equity shares were given against conversion of 42,00,042 Series A, 31,960 Series B and 11,44,946

Series preference shares in Yatra.

The value of the 3.02 million Yatra equity shares was Rs 38 crore, Reliance Capital’s FY17 annual report shows. Over the 15 months, from April 2017 to June 2018, Reliance Capital sold the Yatra shares. On June 29 this year, Reliance Capital informed the US Securities and Exchange Commission (SEC) that the company is no longer a beneficial owner of any Yatra Online shares. “As of June 19, 2018, Reliance Capital Ltd may be deemed the beneficial owner of 0 shares,” the regulatory filing dated June 29 said.

A Reliance Capital spokesperson confirmed the Yatra Online transaction to DNA Money, but did not go beyond the regulatory filing.

Reliance Capital seems to have made a huge gain from its Yatra Online investment. While the 3.02 million Yatra Online equity shares cost it Rs 38 crore, they are currently valued at Rs 120 crore at Yatra Online stock price of $5.75 and an exchange rate of Rs 68.7 per dollar. If the shares were sold for about Rs 120 crore, Reliance Capital easily made three times its investment cost.

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The actual profit multiple may be higher. According to market sources, Reliance Capital may have started offloading the shares in small quantities between April 2017 to June 2018, during which Yatra Online equity shares touched a high of nearly $12 in July-2017.

Assuming a USD-INR currency exchange rate of 65, the Yatra shares held by Reliance Capital were valued at about Rs 230 crore measured on July-17 peak price, or nearly six times the investment cost.

On June 29, 2018, CEO Dhruv Shringi led Yatra Online raised about $53 million from an underwritten follow-on offering of 10,350,000 ordinary shares, including 1,350,000 ordinary shares sold pursuant to the underwriters’ full exercise of their option, at a public offering price of $5.50 per share.

In 2006, Norwest Venture Partners (NVP) had partnered with Reliance Capital, Television 18 Group (TV18), and the seasoned travel industry executives to form Yatra Online.

Source: DNA Indi