Image source: Vacasa
Vacation rental startup Vacasa will go public through a merger with TPG Pace Solutions Corp (NYSE: TPGS), a special purpose acquisition company, in a deal that values the entity at $4.5 billion.
The transaction announced Thursday will provide the Portland, Oregon-based Vacasa with $485 million in gross cash proceeds to help fund future growth.
Once the transaction is complete, Vacasa will be listed on the New York Stock Exchange under the ticker symbol "VCSA" with Matt Roberts continuing as chief executive officer.
In a statement, Roberts said, “As more second homeowners share their homes with guests for the first time, and travelers increasingly prefer to stay at vacation rentals, we believe our partnership with TPG Pace Solutions will help accelerate our growth and the enhancement of our technology offerings for homeowners and guests.”
Vacasa has been considering going public via the SPAC route since at least April and had held meetings with Social Capital’s Chamath Palihapitiya and Altimeter Capital’s Brad Gerstner, according to CNBC.
It ultimately picked TPG, an early investor in several travel and transportation companies, including Uber Technologies Inc, Airbnb Inc and Norwegian Cruise Lines.
Karl Peterson, non-executive chairman and director of TPG Pace Solutions, said, “Vacasa has established a strong strategic position in a large, fragmented market, providing the company with powerful tailwinds for growth.”
“TPG has a long history of supporting high-growth companies, including consumer internet marketplaces, and new economy travel and leisure businesses. Leveraging our extensive public market experience, we believe our partnership will further solidify Vacasa as a scaled hospitality brand in vacation rentals,” he added.
Founded in 2009, Vacasa bills itself as the leading vacation rental platform in North America.
In addition to managing more than 30,000 vacation homes in the US and four countries, Vacasa provides access to property management tools and booking solutions.
The company also partners with rental sites Airbnb, Vrbo and Booking.com.
To date, Vacasa has raised $634.5 million in private equity funding — more than any other startup in its category. Existing investors include Silver Lake Partners, Riverwood Capital, Level Equity, Altos Ventures, Adams Street Partners and NewSpring Capital.
Those firms will retain an 88% stake in the new entity, Vacasa said.
Demand for vacation rental properties was booming before the onset of the COVID-19 pandemic, but interest skyrocketed over the past year as travelers looked for domestic, budget-friendly getaways within driving distance, CNN recently reported.
By 2027, the global market for vacation rentals is expected to reach $113.9 billion, according to Grand View Research.
Roberts, who became CEO last year following the exit of Vacasa’s founder Eric Breon, told CNBC the recent rise in COVID-19 cases has not hurt its business. In fact, he said, the short-term rental industry as a whole is “experiencing significant demand such that occupancy rates are super high.”
According to industry publication Skift, Vacasa is not profitable and expects to lose $49 million this year.
Vacasa, which controls less than 1% of the vacation rental business, does not anticipate turning a profit until 2023, at the earliest.
Source: Equities News