[BENGALURU] Airbnb Inc's new US$1 billion investment from private equity firms Silver Lake and Sixth Street Partners has terms that imply a reduced valuation of the home rental company, people familiar with the matter said on Tuesday.

Silver Lake and Sixth Street received warrants that can be exercised at an US$18 billion valuation, below the US$26 billion Airbnb was valued in early March in its internal valuation, one source said.

The deal was seen as a sign of investor support as the coronavirus grinds global travel to a near-standstill, and the sources said Airbnb will terminate a US$1 billion credit facility following the investment, the sources said.

The deal is comprised of US$1 billion in five-year debt yielding 11 per cent to 12 per cent and warrants that can convert into stock equating to a little over 1 per cent of Airbnb's total equity, the sources said. They requested anonymity as the terms are confidential.

The deal raised Airbnb's cash reserves to around US$4 billion.

In March, Reuters reported the US short-term home rental platform held a phone meeting with lenders to discuss extending an existing US$1 billion debt facility, which was led by Bank of America, amid a slowdown in demand due to the coronavirus pandemic.

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Airbnb is now also in talks with banks about a new line of credit that could be worth as much as US$750 million or US$1 billion, one source said.

Airbnb was valued at US$31 billion in its most recent private fund-raising round.

Silver Lake is targeting a valuation for Airbnb of US$40 billion to US$50 billion to hit its return target, one of the sources said, declining to provide more details.

Airbnb, Silver Lake, Sixth Street and Bank of America declined to comment.

REUTERS