HomeToGo seals merger with Lakestar SPAC in German stock market first

BERLIN (Reuters) -Travel tech startup HomeToGo on Wednesday became the first company to seal a deal to float on the German stock market by merging with a listed shell company, as it tied up with venture capitalist Klaus Hommels’ Lakestar SPAC I.

The merger puts an equity value of 1.2 billion euros ($1.4 billion) on HomeToGo, a Berlin-based marketplace for vacation rentals that connects travellers with online travel agents and independent landlords.

HomeToGo, founded in 2014, recovered from a slump early in the coronavirus pandemic to post record gross booking value of 1.3 billion euros last year, when it also came close to breaking even at an adjusted EBITDA level.

Pandemic trends such as ‘workations’, when people extend their stays to work remotely, helped fuel 27% growth in gross booking value to 904 million euros in the first half of this year.

HomeToGo makes 70% of booking revenues in its core German-speaking markets via its own site, a share that is growing compared with commission-based referrals to the likes of Airbnb or Booking.com.

“With HomeToGo, we have built a marketplace for vacation rentals that removes the friction – for both the demand and supply side,” co-founder and CEO Patrick Andrae, 39, said in an interview.

STAYING IN EUROPE

Hommels, founder of Swiss-based venture capital fund Lakestar, floated the first special-purpose acquisition company, or SPAC, in Frankfurt earlier this year in a bid to create a route for startups to go public in Europe rather than having to float on the bigger U.S. stock market.

His search for a target was short: Lakestar had already backed a $170 million investment round at HomeToGo in 2018 that put a post-money valuation on the business of $630 million, meaning that HomeToGo has more than doubled in value since then.

“We knew each other,” Hommels told Reuters. “We could do due diligence on the execution capacity of the team.”

In addition to the 275 million euros that the Lakestar SPAC raised in February, investors will commit a further 75 million euros to a so-called public investment in private equity (PIPE) as part of the merger.

Hommels, 54, invested more than 20 million euros of his own money into the “friends and family” PIPE, describing HomeToGo as one of the few ways investors will be able to gain exposure to a post-pandemic reopening of the economy and travel.

Current HomeToGo shareholders will retain a 69% stake, backers of the Lakestar SPAC I 25% and investors in the PIPE 6%.

The transaction is expected to close in the third quarter of 2021, subject to shareholder approval, and the company will be listed in Frankfurt under the ‘HTG’ ticker. ($1 = 0.8475 euros)

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