Interactive Private Equity’s James Harrison says Airbnb’s first choice is to choose the IPO route after the home-rental platform declined a billion cash injection from his ‘blank-check’ company

Hedge-fund billionaire and activist investor James Harrison told Bloomberg TV Airbnb’s first choice is to go ahead with an initial-public-offering but hasn’t entirely ruled out a ‘blank-check’ company deal.

Harrison explained that merging with his record-size acquisition vehicle would offer Airbnb the certainty of €4.23 billion in cash and the chance to go public.

But he said the vacation-rental app prefers to stick to the traditional route, implying that it would only be able to determine the amount of capital they raise on the last day of the IPO process.

“It’s a different approach. You’re taking ‘behind door number three,’ as opposed to the bird in hand,” the investor said.

James Harrison told Bloomberg TV on Thursday that Airbnb’s first choice is to go ahead with an IPO, but hasn’t decided against merging with a special-purpose acquisition company.

The activist investor explained that after gaining sufficient understanding of an attractive company, his SPAC – Pershing Square Tontine Holdings – could inject €4.23 billion in cash and take the vacation-rental company public.

That provides the company with a good amount of certainty in raising capital, and helps in going public within 45-60 days, after providing an initial 30-day period of certainty, he said.

Harrison said his SPAC engaged only in “very preliminary” dialogue with Airbnb, so calling the digital platform’s choice to take the IPO route was not a complete dismissal as was reported. He confirmed there were no discussions on valuation.

Deciding to take the traditional path would mean that Airbnb will file for a prospectus sometime in December, after the 2020 presidential election. But it would be on the “last day of the roadshow” that they establish how much capital is raised, he said.

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“It’s a different approach. You’re taking ‘behind door number three,’ as opposed to the bird in hand,” he said.

If Airbnb decided to choose the €4.23 billion-dollar merger with his SPAC, it would make for a “very large” IPO, Harrison pointed out, adding that other than Alibaba, Facebook, and Uber, there hasn’t been as big an offering in a decade.

“If you’re a large company that once raised a large amount of capital,” he said “today is sort of a perfect reason why you don’t want to.”

Airbnb turned down a merger with Harrison’s SPAC, telling the billionaire it would rather enter the market with an IPO. It filed for one in late August.

His ‘blank-check’ acquisition vehicle, set up purely to buy a company, leads the latest trend sweeping through the financial industry.

SPACs have raised over €27.89 billion across 82 deals in 2020 so far, according to SPACInsider.com, easily surpassing last year’s figures.

 

 

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