Chinese travel giant Ctrip invests $180m in India’s MakeMyTrip

Image by Xiangrui Huang

What do you get when you combine the two most populous countries on earth? A huge travel market. That may be the thinking behind Chinese online travel giant Ctrip’s latest investment; the company announced today that it will invest US$180 million in India’s MakeMyTrip via convertible bonds. The agreement also gives Ctrip the right to purchase MakeMyTrip shares on the market (both companies are listed on the NASDAQ) until it owns up to 26.6 percent of MakeMyTrip’s total outstanding shares (counting the shares convertible under the convertible bonds).

Once the deal is completed, the Chinese firm will also get a seat on MakeMyTrip’s board of directors.

Unsurprisingly, this isn’t a purely financial play. The two companies intend to cooperate commercially. “Today’s announcement marks the beginning of the strategic relationship between Ctrip and MakeMyTrip,” Ctrip CEO James Liang is quoted as saying in the press release. Ctrip expects the investment to give it access to India’s burgeoning online travel market, and MakeMyTrip likewise now has a window into China’s massive online travel business.

Extra winners (and losers)

The deal may also provide an India connection for Baidu, which is Ctrip’s largest shareholder, and for American travel company Priceline, which has poured well over US$1 billion into Ctrip over the past few years and also owns a major stake in the Chinese firm.

There are other potential beneficiaries as well. Through a rather complicated deal, Ctrip actually owns about 45 percent of its local competitor Qunar, and it bought up a big stake in competitor eLong earlier this year as well. This deal could potentially affect both of those companies if Ctrip decides to share its new India access with Qunar and eLong in the interest of boosting the value of its stakes.

China’s once hotly-contested online travel market is increasingly looking like it has a clear winner. Ctrip still has strong local competitors in Tuniu and LY, but with stakes in Qunar and eLong as well as global collaborations with Priceline, Expedia, and now also MakeMyTrip, Ctrip is looking increasingly like it’s running away with the win.