Flipkart to Take Over Cleartrip for $40 Mn in Distress Sale

Walmart owned Flipkart bags Cleartrip, one of the oldest travel booking portals in India. Flipkart continues to make strategic investments across the sectors in order to strengthen its portfolio and build an ecosystem around it.

However, the Flipkart-Cleartrip deal would be a mix of cash and equity, and likely to estimate Cleartrip at around $40 million in what is considered to be a distress sale for the 15-year-old Mumbai-based organization amid the pain that the pandemic has inflicted on the travel and hospitality industry.

“Talks have been on and will likely culminate in a transaction soon. The exact terms of the deal are still in the works but an announcement may come through soon. The Covid-19-caused shake up led to the Cleartrip sale,” says sources close to the firm.

Cleartrip’s investors namely Concur Technologies, a provider of integrated travel and expense management solutions, DAG Ventures and Gund Investment. Some of its early backers—Kleiner Perkins, Sherpalo Ventures and DFJ—have exited the company. Cleartrip last raised funds in 2016 and has in all picked up about $70 million in investor capital. Sources said it was valued at around $300 million then.

Established in 2006 by Hrush Bhatt, Matthew Spacie and Stuart Crighton, Cleartrip was positioned as a hotels and air travel booking marketplace. It has been competing with bigger rivals, such as MakeMyTrip and GoIbibo, for the past decade.

Competition in the sector intensified when Naspers orchestrated the merger of MakeMyTrip and its portfolio firm GoIbibo in 2016. In 2019, Naspers sold its shares in the joint entity to China’s Ctrip, an existing investor in MakeMyTrip, and exited as the industry continued to face headwinds.

“Flipkart now wants to invest in Cleartrip and push the pedal on this category. They will back Cleartrip so that it can take on the bigger players in the highly crowded online travel booking industry, which has not been able to clock profits due to the low margins in air travel,” said another person privy to the discussions.

Flipkart plans to retain the management and staff and continue the Cleartrip brand independently. Cleartrip’s backend engine is likely to power Flipkart’s travel and hotel bookings.