By Telis Demos
Home-rental service Airbnb Inc. has finalized one of the biggest
private-funding rounds ever, raising $1.5 billion, which will value
the company at $25.5 billion, according to people familiar with the
matter.
Leading the round are private-equity firm General Atlantic Inc.,
Chinese firm Hillhouse Capital Group, and alternative-investment
firm Tiger Global Management, which are collectively buying about a
third of the shares allocated for this funding round, the people
said.
The deal, advised by Morgan Stanley, includes Singapore's
Temasek Holdings as well as venture-capital firms Kleiner Perkins
Caufield & Byers, GGV Capital, China Broadband Capital and
Horizon Ventures.
Also investing are several public "crossover" investment funds
that are taking stakes in private companies ahead of IPOs.
Mutual-fund firms Wellington Management and Baillie Gifford are
buying in, while T. Rowe Price Group Inc. and Fidelity Investments
are upping their prior stakes, the people said.
Some details of the investment were earlier reported by the
Financial Times.
Only three venture-backed companies have raised as much or more
equity funding in a single private placement, according to Dow
Jones VentureSource. Car-hailing service Uber Technologies Inc.
collected as much as $2.8 billion in a round this year, while
Chinese e-commerce giant Alibaba Group Holding Ltd. raised $1.6
billion in 2011. Facebook Inc., meanwhile, raised $1.5 billion
ahead of its IPO in 2011, including $1 billion worth of shares sold
directly to individual wealthy non-U.S. investors.
At $25.5 billion, Airbnb's valuation would rank third on the
list of venture-capital backed startups valued at $1 billion or
higher, behind Chinese smartphone maker Xiaomi Corp. and
ride-sharing company Uber Technologies Inc.
The Wall Street Journal reported last week that Airbnb's revenue
is expected to exceed $900 million this year, and then is projected
to reach $10 billion in 2020. The company recorded revenue of $250
million in 2013.
Airbnb's website has more than 1.4 million listings of rooms,
apartments, houses and exotic locations for rent. The company makes
revenue by taking a 3% cut of each booking on its website, along
with a 6% to 12% service fee from guests.
With Morgan Stanley's involvement, the Airbnb deal is a landmark
for banks' push to advise on the giant private rounds that are
helping companies put off IPOs.
Morgan Stanley recently expanded its private-stock team, as have
other banks, in anticipation that more companies will raise capital
from many of the same institutions that buy into IPOs. A number of
recent deals have used bankers, including Spotify AB's $526 million
offering via Goldman Sachs Group Inc., and Credit Karma Inc.'s $175
million round via Goldman and J.P. Morgan Chase & Co.
--Douglas MacMillan contributed to this article.
Write to Telis Demos at telis.demos@wsj.com
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