It was around March last year that Stephan Ekbergh, sole owner and founder of South Africa-based Travelstart, was first approached by Amadeus Capital Partners (not related to Amadeus IT by the way).
The first meeting with Andrea Traversone took place in ITB Berlin and Ekbergh recalled it didn’t go well. “He asked some really strange questions and I was rather put off by them, and I said I wasn’t interested.”
But Traversone persisted and when he later disclosed to Ekbergh that one of the investors in Amadeus Capital Partners’ IT Fund was MTN Group, the South Africa-based multinational mobile telecommunications company operating across Africa, Europe and Asia, Ekbergh’s interest was piqued.
“This is one of South Africa’s biggest and most admired companies with 300 million subscribers across its operations,” said Ekbergh. “I could see it making sense.”
Traverson’s timing was good. After more than 10 years of going it alone building up Travelstart, Ekbergh had started to feel that he had taken it as far as he could, and he needed a change. He brought the business to South Africa in 2009 to focus on the growth of emerging markets and to give him and his family a new challenge and start.
“I felt I wasn’t growing personally and I was becoming complacent. I needed a push, a new job,” he said. “It’s almost like going to the gym, you need a personal trainer to push you and I felt I needed a personal trainer.
“I wanted proper advice from someone with skin in the game, they look at it more egotistically. I don’t need someone to sugarcoat things and tell me I am great. I wanted to grow and for the company to grow as well, and I was looking for a good match.”
Besides, the OTA market was changing. While he remains the leading OTA brand in South Africa, global forces were at work. Consolidation among global OTAs, competition, disruption, mobile – you name it – were forcing a rethink and Ekbergh knew it was time to take on more resources and a strategic partnership that would help him as well as his business and team grow.
He started talks with several potential partners but it in the end, call it the call of home or what you like, it was the Amadeus Capital Partners and MTN partnership that interested him most.
“They get Africa. They love Africa. They’ve done it the hard way. We were so alike, we almost fell in love with each other,” said Ekbergh.
Love at first sight it may be but there was still the courtship. Due diligence took six months longer than Ekbergh expected. “The financial due diligence was a nightmare but it was very good for us.”
And so the marriage was consummated last week with Amadeus Capital Partners investing US$40m into Travelstart in exchange for a minority stake.
As Ekbergh said, “I’ve enjoyed 10 years of bachelorhood. I want to get married now.”
Ekbergh (second from right) and his team, from left, Lasse Vinther, COO; Paulina Klotzbucher, MD; Lori Berelowitz, Chief of Staff; and Handre Oostuhuizen, CFO. “Energised by the deal”.
And it feels like the right marriage. “The team are excited and happy, and energised by the deal. We didn’t want to end up like a corporate. MTN may be huge but they think and act like a start-up. They asked some very tough and smart questions. I feel like I’ve got a new job now.”
Of the investment which sees Travesone sit on the board of Travelstart, he said, “Fund raising is an intimidation game. It gives us more self-confidence, makes it easier for us to recruit – we are one of the few tech companies in Africa that are properly funded now.
“It also means that for Nigeria and other emerging markets in Africa, we now have a very solid platform for growth. In these markets, trust is very important. A Swedish company in Africa – the idea worked at first, we had first mover advantage – but the affinity to a solid brand like MTN means a lot.
“They are investing in the future, a 10-year window. We will leverage their network to make this investment fly.”
He will be investing in marketing as well as mobile. Ekbergh sees Africa as the new India. The air market in Africa is worth US$50b and while the African flight market is only as big as Saudi, it’s growing by leaps and bounds. There’s the emergence of lots of low cost carriers and we’ve built a platform for the South African context – wonky payment methods, we take cash on delivery, cash at store, whatever works locally. We work in dual currencies in markets like Kenya and Tanzania. It’s an insanely complex market.
“When I first came to South Africa, I thought somebody’s got to do this insane thing and that’s the same with MTN, they’ve also done this insane thing.”
Ekbergh said Travelstart would continue to invest in the Middle East – it’s launched sites in Turkey, UAE and Saudi – but for the next six months, the focus will be on Africa. It will also look at strategic acquisitions within Africa, Turkey and the Middle East.
Asia also has strong historic ties and trading relationships with Africa. “The Chinese are very active in Africa. There are 1.5 million Indians living in South Africa, as the world globalises, there are massive opportunities for growth,” said Ekbergh.
Asked when he would personally make an exit, he said, “When you take money, you start a five-year exit plan. On your own, you build to build and while I have no plans to exit anytime soon, I hope to exit at some point before I die.
“I need to put all the governance in place – you can’t do that in today’s world of technology if you don’t have somebody backing you, it gives people reason to trust you more.”
