Singapore’s sovereign wealth fund (SWF) Temasek Holdings has participated in home-rental service Airbnb Inc’s latest venture round, in which it raised $1.5 billion from 12 private equity firms. The deal values Airbnb at $25.5 billion, according to the report from the Wall Street Journal.
This new valuation places Airbnb as third in value behind similar venture-capital backed corporations valued at $1 billion or higher, like Chinese smartphone maker Xiaomi Corp. and US-based transport firm Uber. Airbnb’s revenue is expected to exceed $900 million for FY2015 and projected to reach $10 billion by 2020. For comparison, FY2013 saw it earn revenues of $250 million.
This transaction was advised by Morgan Stanley and saw private equity (PE) firms that led the round were General Atlantic, Hillhouse Capital Group of China and global investment firm Tiger Global Management, who bought a third of all the shares allocated in this round of funding. Other participants were venture capital firms Kleiner Perkins Caufield & Byers, GGV Capital, China Broadband Capital and Horizon Ventures.
Morgan Stanley’s involvement in advising this transaction marks a push by banks to advise on large private rounds that are helping companies delay IPOs. The recent expansion its private-stock team is in anticipation of more companies raising capital from many of the same institutions that buy into IPOs.
Mutual fund firms Wellington Management and Baillie Gifford – public “crossover” investment funds that acquire stakes in private companies prior to their initial public offering (IPO) – also participated in this round. Existing investors T. Rowe Price Group Inc. and Fidelity Investments increased their stakes in Airbnb as well.
For perspective, the only other firms to raise a billion dollars or more in their funding rounds in recent years are transport service firm Uber Technologies ($2.8 billion), e-commerce platform Alibaba Group and Facebook. Uber raised $2.8 billion this year through a mix of debt financing from Goldman Sachs and Series E funding from Time Internet and Foundation Capital.
E-commerce platform Alibaba Group raised $1.6 billion in 2011, while Facebook raised $1.5 billion prior prior to is 2011 IPO. Facebook’s funds include $1 billion worth of shares sold directly to wealthy non-US individuals.
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 percent cut of each booking, along with a 6-12 percent service fee from guests.