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Airbnb raises $1bn from new investors

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Via Financial Times

Airbnb has raised $1bn in debt and equity from new investors as the global coronavirus outbreak hampers business on its site ahead of a planned public listing this year.

The short-term rental company said on Monday that the private investment firms Silver Lake and Sixth Street Partners had committed the new capital, without providing details on financial terms.

“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,” Egon Durban, Silver Lake co-chief executive, said in a statement announcing the deal.

The injection of capital could help Airbnb weather a prolonged business downturn while delaying plans to go public. The company had at one point been leaning towards a direct listing, in which no new money is raised from investors.

Last week, the FT reported that Airbnb had reduced its internal valuation by 16 per cent to $26bn, blaming the steep decline in business as travel bans and other containment efforts came into force. On Monday, it would not comment on whether the funding round assigned the company a new valuation.

In a statement, Brian Chesky, Airbnb’s chief executive, said the company, which was founded in the wake of the 2008 financial crisis, would focus on bringing more hosts to the platform, as well as a stronger emphasis on longer-term stays.

“We’ll see a new flexibility in how people live and work, which means they won’t have to be tethered to one location,” he said. “And with an emerging interest in travel that’s closer to home, our customers will look to nearby places to visit, and for local experiences to take part in.”

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Third-party data suggest that bookings on Airbnb have dropped by some 90 per cent in the markets worst hit by the coronavirus.

The company was also moved to apologise to hosts for the way it handled refunds, pledging to use a $250m fund to cover some costs of cancellations. A source familiar with Airbnb’s projections said the company expected its revenue levels to recover by the first quarter of next year.

Silver Lake’s involvement continues a run of high-profile investments for the private equity firm, which last month invested $1bn in the social media site Twitter to help broker a ceasefire with the activist hedge fund Elliott Management.

Sixth Street Partners, which manages $34bn, is known as one of the largest non-bank lenders to emerge since the financial crisis. It has backed technology companies such as Spotify through its capital solutions business.

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