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UPDATE 1-Argentine travel firm Despegar stock jumps on U.S. IPO
September 20, 2017 / 6:57 PM / a month ago

UPDATE 1-Argentine travel firm Despegar stock jumps on U.S. IPO

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NEW YORK, Sept 20 (Reuters) - Shares of Argentina’s Despegar.com Corp rose after making their stock market debut in New York on Wednesday, giving the Expedia Inc-backed online travel agent a valuation of $1.96 billion.

The IPO was priced at $26 a share, at the upper end of Despegar’s proposed $23 to $26 range, raising about $332 million. The stock opened at $29.00 on the New York Stock Exchange and hit a high of $31.50 during the first day’s trade.

“The first day trading has been a textbook IPO, from the bank’s perspective,” said Mike Doyle, Despegar’s chief financial officer, during an interview in New York.

“There’s not a lot of opportunities out there for investors to invest in technology and the consumer in (Latin America), so that’s what we were really most eager to find out, their level of interest in the sector and the region, and we have been pleased.”

Buenos Aires-based Despegar’s valuation makes it one of Latin America’s first online travel “unicorns” - private technology firms worth over $1 billion. Online travel bookings in the region are forecast to increase as its middle class grows and benefits from greater access to smartphones and the internet.

Despegar’s website and mobile app provide airline tickets, travel packages and hotel bookings, catering mainly to Latin Americans. Despegar uses U.S.-based Expedia for hotel bookings outside the region.

In Brazil, one of Despegar’s biggest markets, the company operates as Decolar.com.

“We are very confident in the attractiveness of the company as an investment vehicle, but until you meet the investor community and you have a commitment on that side, there’s always uncertainty,” said Despegar Chief Executive Officer Damian Scokin.

The IPO was 13.4 times oversubscribed, he said, adding that the high level of interest helped them to price the offering “on the upper bound of the pricing range.”

Prior to the 12.8 million-share offering, Expedia owned a 16.4 percent stake in Despegar, which it bought for $270 million in 2015, while U.S. hedge fund Tiger Global Management LLC was Despegar’s biggest shareholder with a pre-IPO stake of 57.3 percent.

Despegar took in $411 million in revenue in 2016, according to the company’s IPO paperwork filed with the U.S. Securities and Exchange Commission.

It reported a profit of $18 million for 2016, compared with a loss of $85 million a year ago.

Morgan Stanley, Citigroup, Itau BBA, Cowen, UBS and KeyBanc Capital Markets are the underwriters of the IPO. (Reporting by Nikhil Subba in Bengaluru and Dion Rabouin in New York; Editing by Sai Sachin Ravikumar and Rosalba O‘Brien)

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