Airbnb eyes $3.09bn in capital raising as its fortunes change
|Published
Airbnb expects to raise up to $3.09 billion (about R46.7bn) in a stock market launch this week. Photo: File
INTERNATIONAOL - AIRBNB expects to raise up to $3.09 billion (about R46.7bn) in a stock market launch this week after boosting its price range, capping a stunning recovery in its fortunes after it was heavily damaged by the Covid-19 pandemic earlier this year.
The US home rental firm plans to sell 51.6 million shares at between $56 and $60 apiece, it said in a regulatory filing yesterday.
It earlier targeted a price range of between $44 and $50 a share for 51.9 million shares.
At the upper end of the new range, Airbnb would have a fully diluted valuation, which includes securities such as options and restricted stock units of $41.8bn.
This is well above the $18bn Airbnb was worth in an April private fundraising round in the early weeks of the pandemic in the US, and above the $31bn in its last pre-coronavirus fund-raising in 2017.
Its market capitalisation at the top end of the range would be about $35.8bn.
Airbnb struggled in the immediate aftermath of the outbreak as travel came to a grinding halt. But as lock downs eased, more travellers opted to book homes instead of hotels, helping Airbnb post a surprise profit for the third quarter.
The company’s stock market debut will be one of the largest and most anticipated US IPOs of the year, which has already been a bumper year for flotations.
Airbnb was launched in 2007 as a website to take bookings for rooms during conferences, including the Democratic National Convention that year in Denver.
Some of its other investors include Hollywood actor Ashton Kutcher, as well as buyout firms General Atlantic and TPG.
Morgan Stanley and Goldman Sachs are the lead underwriters for the IPO.
Food delivery start-up DoorDash also raised its IPO price range last week.
Meanwhile, Airbnb is requiring most hosts outside North America to include all service fees in the rate presented to guests, a move that mirrors how rival platforms operate. It will require hosts who use third-party software to manage bookings to eliminate the “service fee” paid by guests that is traditionally tacked on to the listing price.
Instead hosts will pay a standard fee of 15 percent, up from the 3 percent now. Hosts said they expected most will raise their listed prices to account for the larger host fee, making the change cost-neutral for most guests and for Airbnb. But hosts with fewer properties expressed concerns.
Airbnb said early tests showed the simplified pricing helped drive 17% more bookings.
“Following feedback from hosts we recently introduced a simplified host-only fee structure for professional hosts who connect to our API in certain countries,” said Airbnb spokesperson Christopher Nulty. “Our fee structure for individual hosts remains unchanged.” But Airbnb declined to comment on some of the negative feedback from hosts about the change, citing a quiet period before its IPO.
REUTERS