RateGain, a Noida-based company that builds software products for hospitality and travel industry, looks to acquire at least two firms in the UK or the US this year for about $50 million, or Rs 340 crore.
“When we raised funding in 2015, it was to acquire companies in the sector that complement our business,” RateGain founder Bhanu Chopra said. “Our pipeline has never looked so strong and we will be acquiring at least two companies in 2017 with deal sizes between $10-30 million for each deal,” he told ET.
Bootstrapped with high growth rate since incorporation, RateGa rate since incorporation, RateGain had raised around $50 million from TA Associates its first round of funding in January 2015.
RateGain is scouting for companies that can help increase its global market share and also provide technologies -such as analytics solutions -that can boost its customer base through cross-selling and upselling. “We’ve been scouting companies for a couple of years now, and valuation expectations in the market now are more realistic; not as frothy as it used to be,” said Chopra who is also the chief executive of the firm.
It has limited its search to companies in the UK and US where the hospitality market for software-as-service (SaaS) is more matured and also more fragmented than Asian markets, Chopra said. Western markets, including US and UK, are highly competitive with many players in this space, but deal sizes and profit margins are higher.
With multiple players fighting for a share of the pie in the larger markets, consolidating with smaller firms in certain geographies will give the company an edge over its global competitors.
One of the earlier players in the space, RateGain uses cloud-based SaaS model, which helps it sell globally online, without having a physical presence in a country.
It more than doubled its revenue growth between 2013 and 2015, according to a Deloitte report, recording 105% rise in its revenue received from various business activities. Chopra said the vision for the company was to be a dominant player in the market globally before raising funds through public or private entities.
