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Morgan Stanley, Goldman Sachs expected to lead Airbnb's listing

Airbnb said last month that it planned to become a publicly listed company in 2020, marking it out as one of the biggest names to pursue a stock market float next year.

New York

SHORT-TERM home rental company Airbnb Inc is set to hire Morgan Stanley and Goldman Sachs Group as joint lead advisers on its planned stock market flotation next year, people familiar with the matter said on Wednesday.

The appointments would represent another high-profile assignment for the storied investment banks, albeit potentially less lucrative than usual.

This is because Airbnb is leaning towards going public through a direct listing, rather than an initial public offering (IPO), sources said.

In an IPO, shares are sold by the company or its investors in a process managed by the investment banks as underwriters.

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In a direct listing, however, no new shares are sold, and the role of the investment banks is more of one advising on market conditions, as opposed to underwriting.

As a result, companies can save on the investment banking fees they pay through a direct listing.

Airbnb is considering going public around the middle of 2020, one of the sources said, a timeline that would help it avoid any stock market volatility in the run-up to the US presidential election in November 2020.

Airbnb said last month that it planned to become a publicly listed company in 2020, marking it out as one of the biggest names to pursue a stock market float next year.

Airbnb was valued at US$31 billion in its most recent private fundraising round, according to data provider PitchBook.

The company sold shares in the private market earlier this year at a valuation of roughly US$35 billion around the time it purchased HotelTonight.

Shares are trading in the private market at a price that values Airbnb at around US$46 billion, sources said, cautioning that such thin trading volumes can inflate the price.

By comparison, Hilton Worldwide Holdings and Marriott International Inc have market capitalisations of around US$26 billion and US$40 billion, respectively.

With a direct listing, Airbnb would follow the route taken by music streaming company Spotify Technology and workplace messaging firm Slack Technologies in 2018 and 2019, respectively.

Shares of Spotify and Slack have traded down around 23 per cent and 39 per cent respectively since going public.

Morgan Stanley, Goldman Sachs and Allen & Co were the three investment banks that advised on both the Spotify and Slack listings.

Slack expected to pay US$22.1 million in fees to its three financial advisers. By comparison, the more than two dozen banks on the 2017 IPO of Snap, which was worth about US$31 billion at the time of its public listing, earned a total of US$85 million in commissions.

An Airbnb listing next year would follow a mixed 2019 for tech listings, with the likes of Uber Technologies and Lyft struggling since going public.

Earlier this week, WeWork's parent, The We Company, also filed to withdraw its IPO after investors raised concerns about its burgeoning losses and the tight grip of its co-founder on its governance.

Airbnb took in more than US$1 billion in revenue for the second quarter of 2019, the second time it exceeded that level in its decade-plus history, the company said last month. It gave no details on profitability.

Last month, Airbnb said that as at Sept 15, its hosts had earned more than US$80 billion by sharing their homes and spaces on the app, and as at June 1, it had collected over US$1.6 billion in transient occupancy taxes.

It also said it passed a milestone of having more than seven million Airbnb listings in over 100,000 cities around the world. REUTERS

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