Blackstone back in travel tech with $170 million IBS Software deal
India-based travel tech firm IBS Software has confirmed that private equity giant Blackstone has invested $170 million for an undisclosed minority stake.
IBS said in its statement that Blackstone has effectively bought out General Atlantic, which invested $60 million in IBS back in 2007.
With a range of products for airline passenger, operational and cargo management, and other travel verticals including cruise, hospitality, tour operators and loyalty (with some oil and gas logistics thrown in for good measure) IBS brings Blackstone back into the travel tech arena.
The VC firm is best known in the sector for spending $4.3 billion on Travelport in 2006. When Travelport floated in 2014, it held on to a 7% stake.
The scale of the success (or otherwise) of the investment is not specified, although at the time of Travelport’s IPO, Bloomberg quoted an anonymous insider who said that Blackstone “stands to make about a 15 percent annualized internal rate of return on the investment.”
The statement from IBS (and General Atlantic, nothing as yet from Blackstone itself) is full of the usual corporate soundbites, but a few stand out. Amit Dixit, Blackstone’s managing director for Indian private equity, notes that IBS is a “rare” combination of being a Software as a Service (SaaS) company, with Intellectual Property, operating across the airline, travel and hospitality verticals…”
There’s also reference to “synergies” between IBS and Blackstone’s other tech investments, with its travel tech knowhow coming into play.
And while IBS is not talked about in terms of being a GDS, its wide-ranging portfolio includes many familiar products and services. The case studies page of the airline passenger services microsite gives an idea of global reach of its iFly portfolio and the various parts of the airline landscape it can plug into.
IBS is also strategic partner of IATA and is also active on the new distribution capability (NDC) front – it was named as one of the 19 businesses which took part in the regional workshops this summer before the first usable set of NDC messages was officially released this September.
But there are also some unfamiliar parts of the business – as far as we know Sabre and Amadeus are not into cargo operations ( but Amadeus in particular is into airports). “Oil and gas logistics” is another outlier.
Hospitality tech is an area of interest for GDSs, other tech businesses and the investment community as well. IBS is also active in this vertical via its HBSi unit.
The re-entry of Blackstone into the travel tech mainstream is quite an exciting way to end 2015. Having weathered the post-Lehmans travel slowdown storm and done quite well (reportedly) out of Travelport, it will be interesting to watch how IBS develops over the short-term and where it ends up in the medium term.
It’s also a great sign for India’s travel tech industry.
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