Airbnb secures US$1b investment from Silver Lake, Sixth Street

[BENGALURU] Airbnb said on Monday private equity firms Silver Lake and Sixth Street Partners will invest US$1 billion in the US home rental company, bolstering its finances at a time when the coronavirus outbreak has roiled the travel and leisure industry.

The investment, which was mixture of debt and equity, raises Airbnb's cash reserves to around US$4 billion. The company said it would use the funds primarily to attract more hosts, or homeowners who list their properties for rent on the company's platform.

Silver Lake and Sixth Street were among around 20 investors which approached Airbnb about investing in the company, according to people familiar with the matter.

"While the current environment is clearly a difficult one for the hospitality industry, the desire to travel and have authentic experiences is fundamental and enduring. Airbnb's diverse, global, and resilient business model is particularly well suited to prosper as the world inevitably recovers and we all get back out to experience it," Silver Lake co-chief executive officer and managing partner Egon Durban said in a statement.

Financial details of the deal were not disclosed. Airbnb lowered its internal valuation by 16 per cent to US$26 billion in early March, Reuters reported.

Shares in public competitors such as Marriott International Inc and Booking Holdings Inc have plunged this year 53 per cent and 34 per cent respectively.

Silver Lake is one of the most high-profile tech investors and has made high-profile bets on the likes of Twitter, Dell Technologies and Waymo, the self-driving unit of Alphabet Inc .

Sixth Street was founded in 2009 and had over US$34 billion in assets under management at the end of 2019 across its different strategies including private equity and private debt.

In response to travel bans and a surge of requests for cancellations, Airbnb said last week that it was allocating US$250 million to help offset losses incurred by hosts.

In March, Reuters reported that the short-term home rental platform held a phone meeting with bankers to discuss extending an existing US$1 billion debt facility amid a slowdown in demand due to the coronavirus pandemic.

The company also that US$5 million from the Silver Lake and Sixth Street investment will be contributed to a relief fund for hosts in need of financial assistance.

Airbnb also plans to invest in its business for longer-term stays which can be for several months and is targeted at students or employees on extended work assignments.

The US startup announced last September plans to list its shares and has so far not changed that position.

Morgan Stanley was the financial adviser to Airbnb on the deal.

REUTERS