Nandan Nilekani-backed bus operator seeks up to $70 million to accelerate its expansion
Growth-stage venture capital firm A91 Partners, which has invested in startups such as Sugar Cosmetics, Blue Tokai Coffee Roasters, and beverage maker Paper Boat, is likely to pick up a 15-20% stake in IntrCity SmartBus, they said.
'The specifics of the deal are still being worked out. There is considerable interest so more investors may join the round," one of them said.
The Series D fundraising round will result in a higher valuation for IntrCity SmartBus, which is currently estimated to be worth about $120 million, said the second of the three people.
IntrCity SmartBus, which operates buses on intercity routes (as its name suggests), will use the capital to add 500 buses over the next two years and serve 1 million travellers every month.
The company will also use a part of the funds to expand the operations of its companion brand RailYatri, this person added.
IntrCity SmartBus currently operates more than 300 buses through 30 partner operators on more than 630 routes across 16 states in India, handling about 300,000 passengers every month. RailYatri, a train-booking platform, serves more than 14 million users a month.
The bus operator previously raised $4.5 million in its Series C fundraising round in February last year from Mirabilis Investment Trust, with existing investors including Nandan Nilekani's family trust, Omidyar Network India, and US-based Ujamaa Ventures participating.
Overall, IntrCity SmartBus has raised about $50 million since its inception in 2019.
'We have ambitious plans for the next two years, and we are working on the best strategy to achieve that. Conversations from both private and public market funds is a regular business-as-usual at IntrCity. As of now there is nothing concrete yet," a spokesperson for IntrCity SmartBus said in response to Mint's queries on its fundraising plans.
A91 Partners did not respond to Mint's query emailed on Monday.
Also read | Mint Exclusive: KKR eyes its largest Asia infra fund topping $9 bn, India to corner a big slice
Bus bookings: On the fast-track
IntrCity SmartBus expects its revenue, which jumped 70% to ₹540 crore in 2024-25, to climb to ₹1,000 crore by FY27 as it adds 500 buses and new routes connecting remote regions, co-founder and chief executive Manish Rathi said in a statement last month.
'While the bus industry in India spans three generations, the key challenge traditionally has always been balancing scale with profitability. We believe we are the only player in the industry today to have cracked the code of scaling profitably—using technology, data science, and operational compliance as our core enablers," Rathi had said.
Competition in India's online bus-booking segment is on the rise.
In December, BP Ventures, the venture capital arm of British oil and gas giant BP, invested $9 million in intercity bus operator Zingbus in a Series A funding round. In August last year, Bengaluru-based all-electric bus platform Fresh Bus secured $10 million in a round led by early-stage venture capital firm Maniv. Peak XV-backed travel fintech company Scapia also ventured into bus travel with 'Scapia Buses' in July last year.
Also read | Flipkart on track to open 800 dark stores by December as quick commerce booms
Between July and September 2024, India's intercity bus market saw a gross ticketing value of ₹4,000 crore, with over 5,000 active private bus operators serving 44.78 million passengers, according to redBus's India BusTrack Report.
In FY24, redBus, a bus-booking platform owned by online travel platform MakeMyTrip Ltd, recorded a gross merchandise value (GMV) of over $1 billion and revenue of $100-103 million, with a growth rate in the mid-twenties. The company planned to maintain this growth trajectory in FY25.
MakeMyTrip's bus-ticketing segment saw its revenue rise nearly 32% year-on-year to $31.8 million in the latest October-December quarter.
India's intercity bus industry is projected to touch ₹1.04 trillion in value by 2026, expanding at a compound annual growth rate of over 6%, according to a February 2024 report by the Internet and Mobile Association of India and Grant Thornton Bharat.
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