Travel Technology Firm Mondee Nears $1 Billion SPAC Deal to Go Public

San Mateo, Calif.-based Mondee has made several acquisitions in the past few years to expand into other areas such as hotels, cars and cruises and launch a subscription-based direct-to-consumer segment. The private flight deals Mondee currently specializes in are typically sold by travel agents and other companies and help airlines completely fill planes.

The company was founded in 2011 and plans to position itself as a nimble travel marketplace for consumers who want customized experiences through third parties, the people said. Mondee also services so-called gig travel agents—independent workers around the world who help consumers book travel.

Mondee, led by CEO Prasad Gundumogula, would join several other travel brands in pursuing SPAC deals during the coronavirus pandemic, as investors position for greater demand and shifting travel behavior in the years ahead.

American Express Global Business Travel recently unveiled a $5.3 billion merger with a blank-check company backed by Apollo Global Management Inc. This summer, HotelPlanner and Reservations.com agreed to combine and go public through a SPAC in a roughly $685 million deal.

As part of its deal, Mondee would be expected to raise a $50 million private investment in public equity, or PIPE, featuring funds affiliated with Morgan Stanley Investment Management and other investors, they said.

That money and the roughly $240 million raised by the travel and hospitality-focused ITHAX SPAC in January could be used to expand the business, though SPAC investors can withdraw money before the deal goes through. Such withdrawals have become more common lately because of low share prices, making it harder to complete deals.

Mondee expects this year’s sales to remain well below 2019’s pre-pandemic levels but anticipates rapid growth in the years ahead, the people said.

Also called a blank-check company, a SPAC is a shell firm that raises money from investors and trades publicly with the sole purpose of merging with a private firm and taking it public. After the private company files detailed financial statements with the Securities and Exchange Commission and the deal is approved, that firm replaces the SPAC in the stock market.

SPAC mergers have become ubiquitous as alternatives to traditional initial public offerings, in part because they allow the company going public to make business projections that aren’t allowed in IPOs. There are currently about 575 SPACs in the stock market that together have roughly $155 billion and are looking for private firms to take public, according to SPAC Research.

Write to Amrith Ramkumar at [email protected]