In the latest consolidation in the travel space, Nasdaq-listed Ebix Inc, which supplies on-demand software and e-commerce services to the insurance, financial, e-governance and healthcare industries, has agreed to acquire a, an omni-channel online travel and assisted e-commerce exchange. The transaction values the Bengaluru-headquartered firm at an enterprise value of about $74.9 million, in what is one of the largest M&A deals in the online travel agency (OTA) space this year.

It all started last year, when MakeMyTrip Ltd, which is listed on the Nasdaq, acquired ibibo Group’s travel business, in the largest ever consolidation in the travel space in the country.  The all-stock deal created India’s biggest online travel company worth $1.8-$2 billion. In July 2016, Yatra Online Inc, had agreed to be acquired by Terrapin 3 Acquisition (TRTL), a Nasdaq-listed special purpose acquisition firm, in a reverse merger deal, at an enterprise value of $218 million.

Experts say the India online market has massive potential and there is a long run way available for almost all kinds of internet businesses. The numbers also tell the same story – India is home to the world’s third-largest internet user base with about 300 million users. Cash payments, on the other hand, still rule the roost and comprise 95-97% of the payments made. With the central government’s focus on digital payments, things are expected to change very fast.

With half the country's population of under the age of 25 years, the travel industry will only grow and not remain restricted to the top two or three players, says Anil Joshi, managing partner at Unicorn India Ventures, a venture fund. “Companies are increasingly looking to align or consolidate because at the end of the day they are all going for the same customer. The industry will continue to see consolidation and we continue to see smarter, more tech based, firms emerging,” he says.

Clearly, the Ebix-Via has its staring business reasons. The acquisition of Via expands Ebix’s distribution network to over 224,000 distribution outlets in the South East of Asia, besides offering significant cross selling opportunities for Ebix’s EbixCash Financial Exchange portfolio of products.

“For us taking a strong position in the travel area was very important, since insurance, remittances, phone recharges, prepaid gift cards etc. are the things that complement a consumer’s needs when they engage in travel. We believe that the cross-selling opportunities will further fuel organic growth in our EbixCash Financial Exchange portfolio,” said Robin Raina, chairman, president and chief executive, Ebix, in a statement.

Raina says the company is committed to the India growth story and continues to drive investments from its $200 million fund for consolidating various needs of customers on one platform - EbixCash Financial Exchange.

The transaction is expected to close over the next few days and is expected to be accretive to Ebix earnings immediately. Ebix expects the business to generate around $33 million in GAAP revenues in 2018 with 30 percent operating margins.

This is the fourth acquisition by Ebix in as many months highlighting its focus on strengthening its presence across digital payments, money transfer and travel bookings

Via, besides being the only profitable travel exchange out of all its peers, has grown at a CAGR of 45% over the last 3 years, Ebix said in a statement. Via has over 110,000 distribution outlets, 8000 corporate clients and processes over 24.5 million transactions every year.

When it comes to the market share, Via has about 5% share in both domestic and international airline ticketing in India, 10% in Philippines, 2.7% in Indonesia, 2.1% in Singapore. It has B2C operations in Thailand, Hong Kong and Saudi Arabia.

Ebix intends to consolidate this acquisition into its financial exchange EbixCash.  The acquisition of Via, an omni-channel business, is expected to further strengthen Ebix’s position in the financial exchange market in India, as travel transactions can be one of the key areas of any leading financial exchange, with an estimated user base of 600 million in India alone.

Founded in 2007, Via is backed by investment firms Sequoia Capital and Kalaari Capital.

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