September 20, 2017 / 7:00 PM / 2 years ago

Argentine online travel unicorn Despegar jumps in U.S. market debut

(Reuters) - Shares of Argentina’s Corp (DESP.N) rose as much as 12.3 percent in their stock market debut on Wednesday, giving the Expedia Inc-backed (EXPE.O) online travel agent a valuation of $1.96 billion.

The 12.8 million-share offering was priced at $26 apiece, at the upper end of Despegar’s proposed $23 to $26 per share range, raising about $332 million in proceeds. The stock opened at $29.00 on the New York Stock Exchange and rose to a high of $29.20 in morning trading.

Buenos Aires-based Despegar’s billion-dollar valuation makes it one of Latin America’s first online travel “unicorns.”

Despegar’s website and mobile app provide airline tickets, travel packages and hotel bookings, catering mainly to Latin American customers. For hotel-booking services outside the region, Despegar depends on U.S.-based Expedia, the world’s No.2 online travel agent.

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

Despegar’s IPO comes amid expectations that online travel bookings in Latin America will increase as the region’s middle class population grows and benefits from greater access to smartphones and the internet.

Prior to the offering, Expedia owned a 16.4 percent stake in Despegar, which it bought for $270 million in 2015.

U.S. hedge fund Tiger Global Management LLC is Despegar’s biggest shareholder with a pre-IPO stake of 57.3 percent stake. General Atlantic Partners is another major investor.

Despegar raked in $411.2 million in revenue in 2016, down 2.5 percent from a year earlier, due to fewer transactions and bookings, according to the company’s IPO paperwork with the U.S. Securities and Exchange Commission.

The company reported a profit of $17.8 million for 2016, compared with a loss of $85.3 million a year ago.

Morgan Stanley, Citigroup, Itau BBA, Cowen, UBS and KeyBanc Capital Markets are the underwriters to the IPO.

Reporting by Nikhil Subba in Bengaluru; Editing by Sai Sachin Ravikumar

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