Qunar raises $500m, turns down Ctrip acquisition offer

Qunar, one of China's largest online travel booking platforms today said it is looking to scale up its mobile business after it secured a $500 million investment. 

Silver Lake invested $330 million, while $170 million will come from an undisclosed investor, according to Tech Crunch.

The investment will be used to expand mobile presence, grow business lines, and enhance technology, Qunar said.

Referring to Qunar's first quarter earnings report, the company's revenue has doubled compared to the same period last year for a total of US$108.3 million, Tech In Asia said.

Also the revenues from mobile devices represented nearly 60 percent of the first quarter earnings of the company.

Flight bookings, followed by hotel reservations are the company's main sources of revenue.

In the same Q1 2015 earnings report, Qunar said that it had declined an offer from competitor Ctrip. The report further said that Qunar will remain open to further talks with Ctrip as well as other strategic players the industry. Qunar-Ctrip merger news dates back to April 2014.

Tencent is one of Ctrip's biggest investors, the maker of WeChat and the second biggest internet company in China by market cap.

Ctrip last month purchased a US$400 million stake in eLong, another successful flight and hotel booking service in China. Those shares were bought from US-based Expedia, which divested its US$671 million majority stake in the company.

According to Seeking Alpha, Qunar plans to sell 8M ADS' through a public offering; underwriters are expected to have a 1.2M-share overallotment option. The offering would yield gross proceeds of $379 million.

As expected the competition between Qunar, Ctrip, and eLong is set to be fierce and expensive. The competition amongst the three top players in the industry will not derail the online market from its tracks. Instead the online market is expected to hit revenue of about $75 billion by 2017.