Airbnb issues $1B in debt, joining Uber and Didi as week's billion-dollar issuers
June 17, 2016
Short-term rental and travel services platform Airbnb has reportedly raised $1 billion in debt from banks including Bank of America, Morgan Stanley, J.P. Morgan and Citigroup. The round comes roughly seven months after Airbnb completed a $1.5 billion-plus equity financing that valued the company at $25.5 billion, making it the second highest-valued VC-backed company in the U.S. Initially a way for users to book vacation-home rentals, Airbnb has since broadened its offering; sometime later this year, the company will allow users to book other travel services such as guided tours and even restaurant reservations.
This debt raise has several interesting aspects. For one, it's only the third-largest debt issuance announced this week. Uber is finalizing a leveraged loan of up to $2 billion, and Didi Chuxing raised $2.5 billion in a syndicated loan. Additionally, the Airbnb loan was provided by four large investment banks, giving each a foot in the door, so to speak, to an underwriting position on a possible IPO. Considering the company expects to become profitable in 2016 and has a relatively inexpensive business model, some believe this debt round may indeed be a setup for an offering.