SEP's Skyscanner sold to Ctrip in £1.4bn deal

Kenny Wastell
24 November 2016

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Travel search engine Skyscanner, backed by Scottish Equity Partners (SEP), is to be acquired by listed trade buyer Ctrip in a deal valuing the business at ТЃ1.4bn.

The business, whose largest shareholder is SEP, will retain its headquarters in Edinburgh following the deal and will continue to be run independently by its existing management team. Other VC backers include Sequoia Capital, Vitruvian Partners and Artemis.

SEP invested a total of £9m in Skyscanner and held approximately one third of the company's shares on a fully diluted basis prior to the sale, an SEP spokesperson told unquote". They also confirmed the firm had previously held a higher stake, though it sold some of its shares to enable other backers to invest.

The deal, which values Skyscanner at around 70x its 2015 EBITDA, will see SEP receive most of its returns in cash, though the firm will also receive equity in Ctrip as part of the transaction, according to the spokesperson.

In the nine-year period since SEP's initial investment, the business has expanded its headcount from 30 to 800 and expanded internationally. It now has offices in nine countries, up from four at the time of Sequoia's investment in 2013. The spokesperson told unquote" the majority of its investment supported product development.

Under its new ownership, Skyscanner will undertake an international recruitment drive as it looks to continue supporting global growth.

According to media reports, the business had also explored the possibility of an exit via the public markets. However, while the spokesperson confirmed the company had considered alternative routes, they also said they believed Ctrip ownership offered the company the best potential for future growth.

SEP invested in Skyscanner through its 2006-vintage third fund. The deal is expected to receive regulatory approval by the end of 2016.

Previous funding
In November 2007, SEP injected £2.5m into Skyscanner as part of a series-A investment round. The capital enabled the company to invest in its infrastructure and fund marketing activity.

In October 2013, Sequoia invested in the business in a replacement capital deal that valued Skyscanner at $800m. However, SEP did not sell any of its stake in the company as part of the transaction and continued to hold a 40% stake.

Most recently, Skyscanner secured £128m in funding from five new investors, including Vitruvian, Artemis, Baillie Gifford, the Malaysian government's strategic investment fund (Khazanah Nasional Berhadnd) and Yahoo Japan.

Company
Founded in 2001, Edinburgh-headquartered Skyscanner is an online aggregator of airline tickets, hotel bookings and rental cars. It has a total headcount of 800 with additional offices in Barcelona, Beijing, Budapest, Glasgow, London, Miami, Shenzhen, Singapore and Sofia.

According to a statement, Skyscanner has 60 million monthly active users, up from 25 million in 2013. Its service is available online and via mobile apps in Europe, Asia-Pacific and the Americas.

According to the company, it generated a turnover of £120m in 2015 with normalised EBITDA before statutory adjustments of £22m up by 28% and 5% year-on-year respectively.

People
Scottish Equity Partners – Calum Paterson (managing partner).
Skyscanner – Gareth Williams (co-founder, CEO).
Ctrip – James Jianzhang Liang (co-founder, executive chairperson).