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Singapore’s RedDoorz sets sights on growth via M&A en route to IPO – founder

RedDoorz, a Singapore-based online budget hotel management and booking platform, is looking at acquisitions and partnerships to fuel growth in Southeast Asia before heading for an IPO, according to founder and CEO Amit Saberwal.

Founded in October 2015 by Saberwal – a veteran in the hospitality and travel technology industry who previously worked at Indian travel and airline booking group MakeMyTrip.com – RedDoorz became cash flow positive and broke even in the fourth quarter of 2023, Saberwal said.

It is set to be profitable this year and is gearing up for the next phase of growth over the next two to three years, which will involve a combination of organic and inorganic growth, he added.

RedDoorz is considering acquiring or partnering with companies in the hospitality or technology space, with a business model that would complement its own strengths. In addition to providing online hotel booking services for travellers, RedDoorz leverages technology to serve hotel property owners, giving them ways to streamline their revenue optimisation processes online, as well as manage distribution, pricing, marketing and customer experience.

“We use technology to solve a small asset owner or hotel owner’s problem,” Saberwal explained. “Any company that is in that space, be it in hospitality and using technology to solve problems or just a pure tech player, is a good potential partner. Profitable M&A is a good strategy, and we’re looking at these players because it accelerates our path to IPO.”

He added that while RedDoorz has managed to become profitable this year, there are many companies in the industry that are struggling and finding it tough to raise funding.

“It might make perfect sense for them to partner with us and access the public markets for that fuel that they need for growth,” Saberwal noted.

As part of its M&A plans, RedDoorz is now keen to enter Thailand, and is also open to other Southeast Asian countries with a strong growth trajectory, Saberwal said.

Saberwal added that RedDoorz is already in talks with numerous potential M&A targets, but the process is long as it needs to find the “right chemistry” with business founders.

It is unofficially working with its relationship banks in each of the markets to identify targets, but there is no formal mandate yet. RedDoorz is open to receiving proposals from other financial advisors, ideally from firms “that have the ability to get the job done,” Saberwal said.

With operations across Indonesia and the Philippines, RedDoorz has some 4,000 properties on its platform, giving travellers access to some 62,000 rooms in 300-plus cities, supported by a staff of more than 580, according to a company factsheet seen by Mergermarket.

Although it is headquartered in Singapore, it stopped hosting properties from the city-state on its platform in early 2023 as the economics ceased being attractive in the wake of the Covid-19 pandemic, Saberwal added.

IPO on the cards

Media reports had previously said that RedDoorz was hoping to list in 2024. But Saberwal said the Covid-19 health crisis put a spanner in the works, pushing back the IPO timeline.

“We’re big believers that we want to have a big IPO, not an IPO for the sake of it,” he said. “So the company needs to continue growing organically and inorganically, to get to the revenue level that makes it meaningful for investors.”

Saberwal declined to comment on the new IPO timeline, saying it is a work in progress. The Singapore Exchange is a possible listing destination, but RedDoorz will also look at other options, he said, adding that no investment banks have been officially mandated.

RedDoorz has not ruled out the possibility of a trade sale either, Saberwal said, but also added that its scale is too large to be suitable for this option.

Saberwal declined to comment on RedDoorz’s exact financials. However, he said that in 2019, the firm’s revenues had grown roughly six times year on year, but the days of such heady growth may be over. Instead, the company is pursuing 30% to 40% in revenue growth year on year, while maintaining profitability, he continued.

In the Straits Times’ and Statista’s list of the top 100 fastest-growing companies in Singapore in 2024, RedDoorz ranked 96th, with its revenues pegged at SGD 28.3m (USD 20.9m) in 2022.

There is no fundraising on the cards for 2024 but RedDoorz may look into raising external capital if necessary next year depending on the interest rate environment. Saberwal said the group has access to capital for inorganic growth if needed, given its strong relationships with its current investor group.

RedDoorz raised USD 70m from a first close of a Series C funding round in August 2019, following a USD 45m Series B round the previous month, according to the factsheet. In April this year, it topped up with USD 28.2m in fresh funding from some of its returning investors, according to media reports.

The platform’s backers include Asia Partners, Rakuten Capital, Qiming Venture Partners, Mirae Asset-Naver Asia Growth Fund, MNC Group, Innoven Capital, Jungle Ventures and others, which hold a combined majority stake in RedDoorz, Saberwal said.