Shares of MakeMyTrip (NASDAQ:MMYT) plunged today, closing out regular trading down 8%, after the company announced an equity financing round.
The company said that it has entered into definitive share purchase agreements that are expected to bring in roughly $165 million in gross proceeds, which will require MakeMyTrip to issue nearly 4.6 million new shares at a price of $36 per share. The deal was a private placement and not available to public investors.
On top of that, MakeMyTrip agreed to sell an additional $165 million worth of shares to Ctrip.com and Naspers Limited subsidiary MIH Internet, resulting in issuing the equivalent of another 4.6 million shares.
MakeMyTrip, which is one of India's largest online travel companies, says the proceeds from the offering will be used "to fund business expansion, strategic investments, technology and product development, marketing and promotions, working capital and general corporate purposes."
Prior to the offering, the company had approximately 91.2 million shares outstanding, according to Reuters. That means that the combined 9.2 million shares that MakeMyTrip just issued represents over 10% dilution to existing shareholders. That's a pretty big dilutive hit for existing shareholders, and they don't appear happy about it.