Phanindra Sama andan Padmaraju , the engineers BITS Pilani who created the pioneering bus ticketing service redBus seven years ago, have sold their stake in the venture to the Ibibo Group, a joint venture of South Africa's Naspers and China's Tencent.
Other investors in the company - SeedFund, Kanwal Rekhi's Inventus and Helion Ventures — have also exited for what is said to be an enterprise value of Rs 600-700 crore, making it the biggest overseas strategic acquisition of an Indian internet asset. TOI was the first to report, on June 15, that a deal was likely. The companies did not disclose the deal amount. Avendus Capital was the adviser to the deal.
Ibibo adds redBus to its existing travel assets that include Goibibo.com, the online travel aggregator, and TravelBoutiqueOnline, an online platform that enables thousands of small and medium travel agents.
The last big overseas acquisition was almost a decade ago, when Baazee.com was bought by the world's largest marketplace Ebay in a $55 million deal. Bazee co-founder Avnish Bajaj, who went on to start operations for Silicon Valley VC firm Matrix Partners, told TOI that the redBus acquisition should provide a fresh lease of life to the startup ecosystem and bring in much needed liquidity.
"Baazee in some ways was a clone of Ebay but redBus has a lot of elements specific to India, making it a good buy," he said.
redBus will remain an independent entity and Sama and Padmaraju — both 32 years of age and who together held 18.2% stake in redBus before the sale — will continue in their roles: Sama as CEO and Padmaraju as the person responsible for developing new products. "Charan is the Sergey Brin of redBus," Sama told TOI.
Sama said what persuaded redBus to go with Naspers was the group's culture. "They 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 said, pointing out that the company was receiving buyout interests almost every six months.
Sama first visualized the idea of an online bus ticketing service when during the Diwali season in 2005 he failed to get a bus ticket Bangalore,he was working for Texas Instruments, to his hometown Hyderabad. Last year, business magazine Fast Company named redBus among the world's 50 most innovative companies, alongside Apple, Facebook and Google.
redBus now sells more than a million tickets a month and has over 600 employees. The gross value of transactions on redBus last year was about Rs 600 crore, up Rs 350 crore in 2011-12 . But since the company works on a model of commission revenue on successful transactions, the net revenues are much lower. In 2011-12 , the net revenue is said to have been Rs 33 crore.
Sama said the company turned profitable (on a net basis) in 2011-12.
Mahesh Murthy, managing partner at Seedfund, the first investor in redBus, said the acquisition reiterated the point that with a little bit of money, it was possible to create a scalable business and a sound brand.
Ashish Kashyap, CEO of Ibibo Group, said the acquisition would make the group one of the largest in the online travel space.