Wego kicking off Series F upwards of USD 50m; groundwork for US IPO under way –CEO

Provided by Mergermarket

  • Scouting targets to enhance tech capabilities
  • US listing aimed for at least USD 1bn market cap
  • Travel meta-search segment hotbed for internet giants

Wego, a Singapore and Dubai dual-headquartered online travel marketplace and comparison engine, is kicking off a Series F funding round for upwards of USD 50m as it sets sights on expansion in Asia Pacific and a New York initial public offering (IPO) as early as 2022, said founder and CEO Ross Veitch.

The company is in talks with a few financial advisors for its Series F, Veitch said, adding it remains receptive to speaking with further advisors for the round. Wego works with legal advisors Singapore-based Colin Ng & Partners (CNP Law) and California-headquartered Gunderson Dettmer, the CEO noted.

The travel tech firm is receptive to approaches for its upcoming round from financial investors that preferably have experience listing companies and can serve as anchor investors for an IPO, he said. It will not rule out strategic investors at this time, he added.

The Series F, which it hopes to close by year-end, will likely be the last fundraise ahead of its planned IPO, Veitch said.

Wego aims to build up its balance sheet and war chest to fuel acquisitive growth on the back of its fundraising plans before embarking on the IPO route, the founder noted. It would target regional technology teams and build complementary tech capabilities for its platform, he added. The company is currently looking at a few acquisition targets, the CEO noted, without disclosing further.

The firm is expediting its transition to a holistic travel marketplace in the short-term by adding new product verticals and services in segments like attractions, activities, insurance, and packages, he noted. Some of these offerings can be built internally but the firm would opt for inorganic growth to accelerate development, he added.

The company, founded by Veitch and co-founder Craig Hewett 2005, with further regional operations in Jakarta, Indonesia and Bangalore, India has processed over USD 1bn worth travel bookings last year and is profitable, Veitch said. Its revenue growth stood at 60% for 2018 and is targeting 80% this year, he added.

The travel tech firm has raised around a USD 60m over five fundraising rounds so far, he said. Wego’s investors include Tiger Global Management, Crescent Point Group, SquarePeg Capital and the Middle East Broadcasting Center (MBC) Group, according to the company’s website.

In mid-2017, Wego received strategic investment from Middle Eastern media conglomerate MBC Group in its Series E round, the CEO noted. As the largest satellite operator in the Middle East, its equity partnership with MBC was strategic to building out Wego’s branding reach and television advertising capabilities. A media article from September 2017 said Wego’s Series E totaled about USD 20m, and MBC reportedly invested USD 12m in the round for an undisclosed stake. Dubai-headquartered Arqaam Capital served as financial advisor to Wego in this round, the report noted.

Wego offers unbiased web and mobile application-based comparison of travel related products and offerings and helps travelers locate deals on airlines, hotel and other accommodation bookings.The travel tech firm focuses on the Middle East and North Africa, Southeast Asia and India, he said. The MENA operations are its largest but the company is looking to invest more to capture market share in Asia Pacific going forward, he added.

North America and Europe are more saturated with competition while Wego’s core geographic focus allowed it to establish a strong foothold in MENA which lacks homegrown Online Travel Agencies (OTAs), the CEO said. Since inception, the company has been keen to capture Southeast Asia given its founding team’s experience in the region, he added.

US Market Debut

A listing in the US makes sense for Wego as the North American market has an understanding that rewards public listings of online travel companies, Veitch noted. The firm will target at least USD 1bn market cap for the market debut, he said.

Wego’s IPO education process for investors would be similar to Latin American online travel payer Despegar [NYSE: DESP] which listed on the New York Stock Exchange in September 2017, the CEO said. Despegar raised USD 332m in its listing, according to international media.

The firm has started talking to sector analysts and bankers to form early relationships for its IPO, he said, adding it is too early to finalize an advisor.

Wego announced a commercial partnership this month with South Korea’s Samsung Electronics [KRX: 005930] to preinstall its travel app on Samsung smartphones in the Gulf, Jordan and Egypt, according to a press release. The pre-installed app will be available in 22 languages and offer transactions in 59 currencies. The company announced last month it has partnered with Texas-headquartered vacation rental marketplace HomeAway to provide users access to two million places in 190 countries.

Wego, the largest independent travel-related meta-search company in the world as per the CEO, started off in the meta-search space which would put it in the same competitive category as Connecticut-headquartered Kayak, Australia-based HotelsCombined, or UK-headquartered Skyscanner. But Wego is growing to become more of a marketplace as it looks to capture a larger percentage of bookings directly on its own platform, Veitch said. It is also looking to add payment services, fraud prevention and loyalty programs, making Wego a one stop shop for travel, he added.

In terms of travel app downloads its closest competitor would be Dutch Booking.com, he noted. Alibaba [NYSE: BABA] owned online travel platform Fliggy is a new market entrant in China that Wego is watching closely, Veitch noted.

Skyscanner was acquired by Chinese online travel giant CTrip [NASDAQ: CTRP] for USD 1.7bn in November 2016, as reported. Expedia, CTrip and Bookings Holdings are three big traditional players driving consolidation in the industry, but more activity may come from the likes of Google [NASDAQ: GOOGL] and Alibaba, Veitch highlighted. Google may become more of a competitor as it adds more meta-search features for flight and hotels, the CEO said. It is now adding some booking capabilities making it a competitor to OTAs as well, he added.

by Kainoa Blaisdell in Singapore



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