Wego, the Dubai and Singapore online travel company, acquired Cleartrip’s Middle East unit and Flyin.com from Indian e-commerce business Flipkart as it seeks to expand across the region and sets its sights on a public listing in the future.
The deal, which also includes a technology co-operation agreement between Wego and Flipkart, is expected to close in the second half of 2022, subject to closing conditions and regulatory approvals, Wego said on Monday.
“This acquisition will significantly increase our scale and capabilities and will strengthen our ability to partner and collaborate across our region,” Ross Veitch, chief executive and co-founder of Wego, said.
“We are also excited to begin a multifaceted partnership with Flipkart that will involve us sharing a brand across regions and co-operating on technology.”
Momentum in the recovery of global air travel has gathered pace as more governments ease coronavirus-related restrictions, according to data from the International Air Travel Association.
An 11-percentage point increase for international tickets was registered in recent weeks, in proportion to 2019 sales, according to the industry body. In the period around February 8, in a seven-day moving average, the number of tickets sold was 49 per cent of the same period in 2019.
“We are doubling down on our conviction that the Middle East is an exciting place to be from an online travel perspective; it's a young, fast-growing region,” Mr Veitch told The National on Monday. The Middle East, North Africa, Pakistan and Turkey together represent a region of 600 million people and a travel market worth $100 billion a year.
“Only 30 per cent of travel bookings are done online in Mena but this will move online rapidly,” he said. “Covid-19 has been a huge catalyst for all sectors to shift online … and the same is true for travel.”
By consolidating Cleartrip and Flying.com into Wego, the companies will benefit from economies of scale including more capital, technology-sharing, more user-data to mine for travel trends and greater commercial bargaining power, he said.
The Wego group, which recorded $2bn worth of travel bookings in 2019, expects to rebound to pre-pandemic levels by the end of 2022, according to Mr Veitch.
“A lot of restrictions are coming off in destination markets, so people are more comfortable booking a trip,” he said. “There's a lot of pent-up demand, every time a route reopens there's a big step-change.”
While travel segments such as leisure and social visits are witnessing a rebound, Mr Veitch also expects business travel in the Middle East to record a faster-than-expected recovery.
“A lot of business in this part of the world is based on relationships, you can maintain some of that on Zoom or Teams, but people want to jump on a plane to see partners, colleagues and employees as soon as possible,” he said.
Wego's growth targets remain focused on Mena, with wider ambitions to expand into emerging markets and to go public, he said.
The executive declined to disclose the value of the acquisition, but said Wego received funding from new and existing investors, with the deal likely to be closed in the third quarter of 2022.
“We see this transaction as effectively doubling our scale overnight, accelerating us to point where we can go public and significantly shortening that time frame,” Mr Veitch said.
It is “too early to speculate” on the timing of a potential listing and the company sees regional stock markets, the US and London as options for its debut.
Asked when the company would be IPO-ready, he said: “We have at least 12 months of hard work to get the teams across Wego, Flyin and Cleartrip working together and driving those synergies. Travel markets also need to recover from Covid. And then we can get back into high gear in terms of growth.”
The acquisition will see the group grow to 400 employees and it is seeking to hire more people, he said.
“We are in a lean fighting shape … It's not about cost-cutting synergies, but tech-sharing and best practise-sharing.”
Cleartrip is an online travel company in India that expanded organically into the Middle East in 2010 and in 2018 acquired Riyadh-based Flyin.com, which played a similar role in developing online travel in Saudi Arabia.
Founded in 2005, Wego has its headquarters in both Dubai and Singapore and is backed by investors such as Tiger Global Management, Crescent Point, Square Peg Capital, Middle East Venture Partners and the MBC Group.
Wego and Cleartrip have their regional headquarters in Dubai internet City.
“The opportunity in travel tech for India is vast, and through Cleartrip, we have been able to provide our customers with a wide range of travel experiences and deeper value,” Ravi Iyer, senior vice president and head of corporate development at Flipkart, said.
“Given our strategic priorities and focus on the Indian market, the acquisition of Cleartrip’s Middle East business by Wego provides continuity to its business, and we believe that they are the right partners to boost its next phase of growth.”
Rothschild and Co. advised Flipkart on the transaction.
Stuart Crighton, co-founder and head of Cleartrip’s International Business, said the company's focus is to build an online travel business with “global ambitions” based in the Middle East.
“The region is well placed to be the engine of growth for travel both as a destination and as a highly mobile, digital-savvy demographic looking for choice and value,” he said.
“By joining forces with Wego, we are able to offer everything from search to service and to contribute meaningfully to that story.”
