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Yanolja may soon receive the heaviest of heavyweight endorsements. SoftBank Group’s $30 billion Vision Fund wants to pick up a 10 percent stake in the South Korea-based travel company, according to a report.
The world’s largest venture capital fund is set to announce an investment of about $800 million in the startup, the Seoul Economic Daily reported, citing investment banking sources.
The companies declined to answer Skift’s questions earlier this week on the rumored financing talks.
It isn’t clear what valuation the investment might place on Yanolja, which is an online travel agency, a hotel tech provider, and a hotel operator. The company had a $1 billion valuation in 2019 when Booking Holdings and Singapore’s sovereign wealth fund GIC participated in a $180 million funding round and collectively took an approximately 35 percent to 40 percent stake in Yanolja.
Until recently, Yanolja had been preparing to go public and had hired Mirae Asset Daewoo and Samsung Securities as underwriters. Yet while the startup is profitable and generated $10.6 billion (11 trillion Korean won) of global business-to-business transactions in 2020, the pandemic has held back its growth.
Delaying a U.S. initial public offering (IPO) to, say, 2023 could allow the startup to present stronger, post-pandemic numbers to investors and lead to a more robust IPO. In March, Vision Fund successfully saw one of its South Korean portfolio investments, e-commerce company Coupang, debut in a U.S.-based IPO.
In May, Softbank Vision Fund proposed taking a $2 billion stake in Yanolja by buying out Booking Holdings and GIC’s shares, the Korea Economic Daily reported. It’s unclear if Booking Holdings and GIC have since resisted selling their stakes or if that report was erroneous.
Softbank’s 10 percent stake, if it materializes as expected this month, would come as the Vision Fund is soaring again. The roughly $100 billion investment vehicle had an approximately 30 percent “internal rate of return” for its outside equity holders since 2017 and earlier this year, it said. Softbank has raised a $30 billion sequel.
Yet Softbank’s go-big-or-go-home approach has had a mixed record and caused some hiccups along the way, such as with its investment in WeWork that failed to go public as planned. One of its portfolio companies, hospitality conglomerate Oyo, said on Wednesday it would retrench after a geographic over-expansion before the pandemic.
Yanolja’s Surprise Hotel Tech Appeal
Yanolja appears to also be levitating, despite the pandemic. It said this month it would hire 300 technology workers over the next six months, suggesting it has the capital to hire aggressively. It also launched in South Korea a $22 million summer marketing blitz that has a “travel technology” theme.
Yanolja is a multi-tool like a Swiss Army knife. It began in 2005 as a listing service for budget hotels but blossomed into a full online travel agency. It has branched into offering different categories, such as attractions ticketing, rail ticketing, spa passes, and restaurant reservations. Separately it manages a few hotel brands and has an investment in hotel brand Zen Rooms.
Yet what Softbank probably likes the most about Yanolja is the startup’s bid to become a provider of software services to hoteliers worldwide.
Yanolja provides cloud-based hotel management solutions to more than 30,000 customers worldwide. A capital injection would speed Yanolja’s development of its platform for hotels, leisure facilities, and restaurants worldwide. One of its offerings is a cloud-based hotel property management system that promises to be more cost-effective than legacy systems.
In May, Yanolja CEO Sujin Lee signed a deal with Citibank Korea to use Citibank’s global connections to expand these services. It plans to “expand license agreements and countries through strategic business alliances with Citibank” and make Citibank’s payment services more readily available to the hospitality industry.
The pandemic-related disruption to travel has exposed many hotel companies as having old-fashioned processes. Digitization is overdue.
Savvier hotel companies will add more software to their methods to trim labor costs and distribution costs. That trend means that tech vendors such as Yanolja, Oracle Hospitality, Cloudbeds, SiteMinder, RateGain, Amadeus, Sabre, Protel, and Mews have plenty of room to grow.
Taking a one-stop-shop approach to hotel tech is key to Yanolja’s business-to-business strategy. See Skift’s earlier Yanolja analysis.
Mergers and Acquisitions Ahead
A Softbank investment would let Yanolja do more mergers and acquisitions like its December acquisition of Triple, a travel data services company.
If Yanolja wants to have an initial public offering in the U.S. instead of South Korea, it will need to have more mergers and acquisitions outside of Asia to bolster its claim of having a global scale.