Biletall marks Abraaj’s third investment made from the Anatolia Growth Capital Fund. In this Deal View, we speak to Abraaj Director Levent Yesildag about the transaction and what a thriving online travel market means for investors.
Q: Levent, the transaction marks the first-ever technology investment undertaken by a private equity or venture capital fund outside of Ankara in the Anatolia region of Turkey. Would you please give us insight on the investment rationale?
Levent Yesildag: Certainly, there are many reasons why Biletall is an exciting investment for Abraaj. As one of Turkey’s leading online travel agents and ticketing platforms, Biletall truly reflects a successful local entrepreneurial story. Established in 2006, the Company commenced operations by solely selling intercity bus tickets online. Today, the Company sells tickets of more than 170 intercity bus companies, 120 domestic and international airlines, domestic ferry and train services. As the sole developer of a global distribution system (GDS) for online intercity bus tickets in Turkey, the Company has a strong market position with 54% share of intercity bus ticket sales made through online travel agents (OTAs).
This proprietary transaction is a strong fit for our investment strategy and the mandate of the Anatolia Growth Capital Fund, which invests in high growth companies in the Anatolian heartland of Turkey. Abraaj is a long-term investor in Turkey, having pioneered private equity in the region. We also have a strong track record of investing in family businesses in the country and growing them to become local and regional champions. Biletall is no exception, and we will help the company to solidify its market leading position within the online travel and tourism sector.
Q: Given Abraaj’s experience in the country and global track record in successfully investing in online businesses, how will the firm help grow Biletall?
Levent Yesildag: We anticipate significant growth ahead for Biletall. Indeed, we have a strong track record investing in online businesses across growth markets. Examples include Hepsiburada, Turkey’s market leader in the online retail sector, and Big Basket, India’s leading online grocery store. In both these businesses, we helped drive expansion, scaled operational efficiencies and developed cost-effective customer acquisition and loyalty programs.
Alignment is core in a partnership, and we have built a strong relationship with the team at Biletall aligning on the Company’s strategic growth plans going forward. Together as partners, we will focus on increasing customer acquisition through targeted marketing and advertising, strengthening the Company’s loyalty program, improving sales channels, penetration and product mix. As Biletall grows, it is essential to keep the Company’s core IT platform including the CRM system as best-in-class and cutting edge. We will also explore other strategic opportunities to enhance the consumer experience such as offering adjacent and value-added services.
Q: Why is Abraaj optimistic about the online travel sector in Turkey?
Levent Yesildag: There are several key growth drivers of the online travel and tourism market in Turkey. The country exudes an increasing and youthful middle-class, with 71% of its population under the age of 45. Research has shown that those between 25-44 years of age are the most frequent travelers, and consequently the expedited expansion of a young, aspirational middle class is driving demand for domestic and international travel. In addition, whilst number of journeys are on the rise, just as integral is the increased spending per journey by Turkish travelers.
Even more significant is the changing consumer habits leading to continued growth in online ticket purchases, which we see accelerating given increasing internet, smartphone and credit card penetration in Turkey. As a result, the online domestic travel market is forecast to grow at over 20% per annum between now to 2021.
Supported by these attractive market dynamics and as a market leader in Turkey, Biletall is well-placed to capture significant growth and upside going forward.
Read the press announcement of the transaction here.